China's Corporate Social Credit System: The Dawn of Surveillance State Capitalism?

19 Pages Posted: 1 Oct 2021 Last revised: 30 Nov 2023

See all articles by Lauren Yu-Hsin Lin

Lauren Yu-Hsin Lin

City University of Hong Kong (CityU) - School of Law; City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law; European Corporate Governance Institute (ECGI); Washington University in St. Louis, School of Law

Curtis J. Milhaupt

Stanford Law School; European Corporate Governance Institute

Date Written: September 30, 2021

Abstract

Chinese state capitalism may be transitioning toward a technology-assisted variant we call “surveillance state capitalism.” The mechanism driving this development is China’s corporate social credit system (CSCS) – a data-driven project to evaluate the “trustworthiness” of all business entities in the country. We provide the first empirical analysis of CSCS scores in Zhejiang Province, to date the only local government to publish the scores of locally registered firms. We find that while the CSCS is ostensibly a means of measuring legal compliance, politically connected firms receive higher scores. This result is driven by a “social responsibility” category in the scoring system that valorizes awards from the government and contributions to Chinese Communist Party sanctioned causes. Our analysis underscores the potential of the CSCS to nudge corporate fealty to party-state policy and provides an early window into the far-reaching potential implications of the CSCS.

Note:

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Keywords: State Capitalism, Chinese Communist Party, Corporate Compliance, Regtech, Social Credit System

JEL Classification: K22, O21, P21

Suggested Citation

Lin, Lauren Yu-Hsin and Milhaupt, Curtis J., China's Corporate Social Credit System: The Dawn of Surveillance State Capitalism? (September 30, 2021). European Corporate Governance Institute - Law Working Paper No. 610/2021, City University of Hong Kong School of Law Legal Studies Research Paper No. Forthcoming, Stanford Law and Economics Olin Working Paper No. 560, The China Quarterly (forthcoming), Available at SSRN: https://ssrn.com/abstract=3933134 or http://dx.doi.org/10.2139/ssrn.3933134

Lauren Yu-Hsin Lin

City University of Hong Kong (CityU) - School of Law ( email )

Tat Chee Avenue
Kowloon
Hong Kong

HOME PAGE: http://www.cityu.edu.hk/slw/about-school/our-people/dr-lin-lauren-yu-hsin

City University of Hong Kong (CityU) - Centre for Chinese & Comparative Law

83 Tat Chee Avenue
Room P5300, 5th Floor, Academic 1
Kowloon Tong
Hong Kong

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Washington University in St. Louis, School of Law ( email )

1 Brookings Drive
St. Louis, MO 63130
United States

Curtis J. Milhaupt (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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