China will ramp up work on the national social credit system and further strengthen the personal credit information protection mechanism in the country, officials said on Dec. 25.
Officials said severe punishment will be given to those who violate data privacy rules, while all the services used for evaluating corporate and personal credit conditions will be put into a national supervisory system.
Companies that provide credit information services for individuals will have to apply for licenses and get the necessary approvals before providing such services, said Chen Yulu, vice-governor of the People's Bank of China, the central bank.
To ensure that personal information is adequately protected, the central bank will work with other government departments to prevent illegal personal data trading by big data companies, financial institutions and credit information service companies, Chen said.
The PBOC will launch interim procedures for the protection of personal financial information, in accordance with the upcoming personal information protection law and the data security law, to further streamline the credit information regulations for the financial services sector, said the vice-governor.
China will also set up the world's largest database of financial credit information and it will be a key component of the national social credit system.
The government will allow market-based credit information service institutions to collect business and personal credit information, and such collection will not be restricted to bank lending data, said Chen.
A recent executive meeting of the State Council, China's Cabinet, said that measures will be taken to determine acts of bad faith. Standards for defining inappropriate activities and the boundary of legally sharing credit information should be further clarified, the meeting said.
And punishment for bad-faith acts shall be enforced in accordance with laws and regulations, to make sure that the penalties that are meted out are commensurate with the dishonest behavior.
Lian Weiliang, vice-director of the National Development and Reform Commission, the country's top economic regulator, said on Dec 25 that efforts will be made to ensure that the laws and regulations are followed, including those dealing with credit information records, black list of bad faith acts, and the punishment measures.
Some local governments have set their own standards for collecting credit information. This practice needs to be abolished as it does not follow the central government policy documents nor the legislative procedures, said Lian.
The PBOC, as the financial regulator, had updated the credit information system earlier this year using advanced information technology, and also improved its security.
The World Bank's Doing Business Report, a flagship research that is published every year, marked China as one of the world's best performers in terms of developing the credit information system.
Officials said the next five years should be a golden period for developing the credit information service market in the Chinese mainland.
Earlier this month, the central bank had vowed to improve its oversight on the nation's bond credit ratings industry to prevent default risks of State-owned enterprises.
Based on an improved credit information system, the PBOC will provide more services like chattel mortgage and warranty of title to small and micro firms, said Chen.
On Jan 1, the national unified chattel mortgage system will start services, which will support small business financing based on the rating of their credit conditions.
Recently, the PBOC approved the personal credit business license of PuDao Credit Information Co Ltd, a sign to increase the effective supply of credit information and actively promote the market-oriented development of China's credit information services.
