China’s corporate social credit system blacklist that companies pay US$2,500 an hour to avoid
- Companies fear inclusion in China’s corporate social credit system, which can result in punishment for bad behaviour
- Beijing says system is designed to scare companies straight
China Railway Construction Corporation deployed thousands of workers over four years to build part of a coal-carrying line from Inner Mongolia to Jiangxi province.
The project cost about 200 billion yuan (US$28.5 billion) and was heralded by state media last year as an exemplar of “safe production” with no injuries or deaths. Except there were, and China Railway’s project managers were covering them up.
A tip-off exposed the conspiracy to local reporters, and a state-run China Railway unit eventually admitted that three workers died in 2017 when a panel they were standing on fell into the Ganjiang River. The managers were punished and so was the subsidiary: It was blacklisted for a year by the government and subject to more inspections, limits on bidding for public projects and restrictions on issuing bonds and shares.
“It’s a typical credit rating but sort of on steroids,” said Andrew Polk, co-founder of Beijing-based Trivium China, which consults companies on social credit.
“The system will be widely used in China to oversee domestic and foreign companies, and firms have to assign resources to keep a real eye on making sure their records are clean.”
