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A view of Lujiazui in Shanghai on January 27, 2025 Photo: VCG

China has issued a guideline on improving the social credit system, aiming to promote the deep integration of the system with all aspects of economic and social development, and provide strong support for accelerating the construction of a unified national market, maintaining a fair and orderly competitive market order, and promoting high-quality development, according to the Xinhua News Agency on Monday.

The guideline, issued by the General Office of the Communist Party of China Central Committee and the General Office of the State Council, stressed that the social credit system is a basic system of the market economy. 

The document outlined 23 policy measures in various aspects, including building a social credit system that covers all types of entities, strengthening the data foundation of the system, improving mechanisms to reward credibility and penalize dishonesty, refining credit-based regulatory and governance mechanisms, and enhancing the marketization of the credit system.

Experts said that the document's detailed measures will involve a wide range of entities, including local governments, enterprises and individuals. By enhancing credit evaluation, the measures are expected to address challenges such as debt defaults and liquidity issues, to support the country's high-quality development goals, experts noted.

Credibility is the bedrock of market-oriented economic activity, Cao Heping, an economist at Peking University, told the Global Times on Monday, adding that strengthened credit system can significantly help entities to identify economic wrongdoing and prevent entities from engaging in misconduct.

The guideline outlined various measures to strengthening credit building at government departments, market entities, social organizations, individuals and the judicial and law enforcement systems. 

In terms of data, the guideline called for efforts to study and strengthen the application of blockchain and other technologies in credit information management, and improve the sharing of commercial contract information, industrial chain information, transaction information, and other information on the premise of protecting the legitimate rights and interests of entities and individuals and information security.

Privacy protection and prevention of social credit abuse feature prominently in the new guideline. It bans unauthorized or excessive use of personal data, including sensitive information and non-credit data, in any credit evaluation process and calls for stricter safeguards for disclosing the credit information of state-owned enterprises under the premise of ensuring data security.

With rapid development in digital technology, it is equally important to regulate how personal data is handled during the process of credit verification, Tian Yun, a Beijing-based economist, told the Global Times on Monday. This comprehensive guideline will help maintain trust in the system while addressing new forms of economic activity, Tian added.

In an effort to balance rewards and penalties, the guideline sets out mechanisms for entities to restore credit after rectifying misdeeds. Industry regulators are required to clearly define the criteria, procedures and duration for placing and removing entities on the serious misconduct blacklist. The new system stipulates that once those entities fulfill corrective measures, they should be promptly removed from blacklists and freed from related disciplinary actions.

Ensuring a channel for credit rehabilitation is essential, Tian said, adding that rewarding good faith while allowing a pathway to rectify missteps encourages broader participation in economic activity and helps sustain the vitality of the market.

The document further calls for enhanced credit supervision in platform-based industries, including online streaming services, self-media and multi-channel networks, emphasizing information sharing between public credit bodies and platform operators. This measure aims to guide healthy market behavior in rapidly growing online sectors.

Optimizing the social credit system with the support of new technologies can better maintain a fair and orderly competitive market environment and promote high-quality economic development, Cao said, noting that the social credit system also aims to evaluate market behavior in new economic forms.

China has been constantly improving its social credit system. In 2024, China's top economic planner, the National Development and Reform Commission, released plans to improve the social credit system, focusing on integrating local financing credit service platforms, strengthening privacy and business secret protections, and ensuring safer data management.

The new guideline goes a step further by laying out clear and enforceable directives for regulators across different sectors, fueling confidence in China's ongoing market reforms, Tian said.