The Chinese Corporate Social Credit System(s): One System to Rule Them All?

Stina Hinderson

Student thesis: Master thesis

Abstract

The aim of this thesis is to investigate the Chinese Social Credit System. Commonly envisioned as a massive scale database with a vast number of governmental agencies collecting data and rating individuals and companies. While the social credit system has gained attention and criticism in Western media, it has mainly focused on the individual-based side. However, the initial visionary policy documents make it clear that the target of the system is mainly corporations. With China’s tremendous importance for international business, understanding a potential game-changer within the regulatory system and the playing field of doing business in China, is vital. Therefore, the goal of this thesis is to expand and contribute to the little research done on the corporate side of the system. The thesis aims to illustrate the connections and governance of the ecosystem that makes the social credit system. It investigates the structure of the different actors involved, by conducting a social network analysis. In order to understand the corporate social credit system network within its political context. Tying it to the theoretical modes of governance: top level design and fragmented authoritarianism. The two modes of governance can explain policy implementation and steering within the relatively decentralized national legislative structure. In addition, the thesis dives into the question if it is really is one coherent system, despite the numerous actors involved. In order to understand the effectiveness and implications for a company that is listed in the system. By analyzing blacklists – which is often described as the central incentive mechanism of compliance. Through tracking the source of data in different leveled databases and blacklists, the paper is able to map out the connections between the different actors and their databases. The thesis finds that the Corporate Social Credit System is fragmented into silos and that there is no cohesive system in place. Despite the target of implementing the system in 2020. A reason behind it is the decentralized nature of the system involving numerous different databases on multiple levels, ranging from different municipalities to ministries and third-party actors as well as that there is no governmental agency solely responsible for the social credit system. Although 3 the NDRC and PBoC has to ability to influence and steer actors that stray too far from the target. In turn, one could even describe many of the databases on different levels as their own corporate social credit system, due to their functionally independent nature and different targets. Furthermore, blacklists are unlike typically depicted not connected to a scoring system. Thus, the author suggests that the corporate social credit systems should be understood in the context of a previous lack of a national credit system. The multitude of databases have been created in order to facilitate background checks, improve legal enforcements and increase trust on the market. Yet it is perhaps not meant to become an all-purpose coherent database. Especially since there are legitimate methods that a company can delist themselves and remove a bad track record. However, since the system is still in its infancy, there is still a possibility that the shape and structure might change in the future. Despite this, it is the author’s hope that by clarifying the structure of the Corporate Social Credit System it can facilitate further understanding and future research of the system.

EducationsMSc in International Business and Politics, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages90
SupervisorsKjeld Erik Brødsgaard