Social credit: The next China risk for Australian business

As China recovers from the Covid-19 crisis, the apparatus of the state is about to be devoted to a new form of social control. By the end of 2020, China plans to introduce its national social credit system. For some, this evokes dystopian visions of a surveillance state, monitoring more than a billion people and millions of firms. For others, it promises to harness the latest tech to address China’s massive legal, ethical and business compliance problem. After the Chinese state’s relative success in containing the coronavirus outbreak, it will be emboldened to make its policing of behaviour more permanent. The social credit system’s rewards and punishments seek to enforce “correct” behaviour in people’s everyday lives. For businesses – including thousands of Australian businesses integrated into Chinese supply chains – compliance within China is about to be monitored in a much more comprehensive way, which generates new risks.

Despite the country’s remarkable economic rise, one of China’s notorious problems has been the massive corruption that has accompanied its hybrid state-market model of development. Xi Jinping’s supposed clampdown on corruption has proved popular domestically, but it remains difficult for external observers to measure its success, given China’s opaque legal system. Even if China’s social credit system for business is welcomed domestically to tackle corruption, it will likely be perceived internationally as yet another example of China’s deepening authoritarianism. For critics in the West, it will provide another reason for the world to be afraid.


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