China has built the world's largest credit reporting system, which will serve as a basic information provider for the construction of a nationwide social credit system that helps trace individuals' economic activities, restrict defaulters' moves everywhere and build China into an orderly society, officials and analysts told the Global Times on Friday.
"China has now built the world's largest credit reporting system in terms of the information being recorded, the scale of data and the scope of coverage," Zhu Hexin, vice president of the People's Bank of China(PBC), the country's central bank, said at a press briefing of the State Council Information Office in Beijing on Friday.
So far, information about 990 million individuals and 25.91 million enterprises and other organizations has been recorded in the system, Zhu said.
PBC officials told the Global Times at the press briefing that the credit reporting system will facilitate China's ongoing efforts to build a nationwide social credit system by 2020. The PBC, along with the National Development and Reform Commission, China's top economic planner, has led the efforts in setting up the social credit system.
"The central bank's credit system is like a basic information provider. We share information with relevant departments that also provide information to the social credit system, through which we can form a deeper and wider network that is able to track individuals' behavior and make [debt] defaulting impossible," Wan Cunzhi, head of the Credit Information System Bureau of the PBC, told the Global Times.
Wan said defaulters will hit hurdles everywhere in economic activities. For example, someone with outstanding debts in China's southeast costal area will be banned from accessing loans, even if they apply in northwestern regions decades later.
In the credit system, there is also an invisible blacklist, which will extend to various aspects of life, including the housing fund, social security and utility records, which will help foster a comprehensive and accurate social credit system, Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times.
In this way, every individual will be motivated to be honest and society will be managed in an orderly manner, Wan said.
Under the social credit system, China has been releasing blacklists of people and enterprises with dishonest behavior since 2018. In May, China banned 307 "discredited" people from taking trains and 960 are banned from flights.
Dong also suggested that Chinese regulators, financial institutions, and internet firms that provide online financial services should work together to help build a wide-ranging credit scoring system. "We have not reached the same level as the US in building a credit system which has a scoring system to rate a person's creditworthiness," he said.
China's credit reporting system also plays an indispensable role in preventing financial risks and maintaining financial stability, officials said. Small- and micro-sized enterprises as well as private firms have benefited a lot from the system, as it eases the information asymmetry in China's financial market by providing a wider scope of information sharing.
For example, a credit provider in Suzhou, East China's Jiangsu Province has collected information about tax payments, social security contributions, utility bills, and IP applications from local government departments, which help the company to form credit scores and reports for small- and micro- enterprises, and based on this, they can easily access bank loans.