The following article appeared on the theory column of the People’s Daily two years ago. It provides an official policy interpretation of the unified social credit number system – the 18-digits code attributed to enterprises, and social organizations. This official intepretation of an existing policy prevails on any other possible policy interpretation by Western interpreters. The reasons why official Chinese policy interpretations of any given policy document are weightier than Western policy interpretations of the same document have been amply explained in a presentation I delivered at the 2016 edition of the European China Law Studies Association Conference. The paper can be accessed free of charge here.
Explaining the Unified Social Credit Number System: breaking credit information “islands”
Interpreter: the relevant responsible person of the National Development and Reform Commission.
Reporter: Zhu Jianhong
June 26, 2015 08:15 Source: People’s Network – People’s Daily
Original title: breaking the credit information “island” (Policy Interpretation)
Determining the 18-digits “identity card number” for legal persons and other organizations.
The unified social credit number has a total of 18 digits, and it is composed by five parts: a one-digit registration number assigned by the department for industry and commerce; the agency code (1 digit), the code identifying the administrative jurisdiction of the department for industry and commerce where the registration occurred (6 digits), the subject identification code (9 digits, the organization code is used), a check digit (1 digit). It has five characteristics.
The first one is its uniqueness. Unified social credit numbers are unique across the country, with the nine-digits subject identification code (organization code) being unique across the country. A subject can only have a unified social credit number, a unified social credit code can only be assigned to a subject. After the subject will no longer exist, the code will be retained and the backtracking function will be retained. For example, if a professional unit becomes an enterprise, according to legal procedure, it is necessary to cancel the institution, and to create an enterprise anew. The newly established enterprise is a new subject, and it will be necessary to attribute a new unified social credit number to it.
The second one is its compatibility. The unified social credit number is to the biggest possible extent compatible with the existing types of agency codes. It allows the stability and reliability of codes without a meaning, and it can also facilitate the role of classification management of codes with a meaning, reducing to the biggest possible extent the reform cost of various departments.
The third one is its stability. Once the unified social credit number is attributed, it will remain the same throughout the existence of a subject, even though there may be changed in information about the subject. For example, when legal persons and other organizations migrate or change their legal representative, business scope, etc., their unified social credit number will not change.
The fourth one is its full coverage. After the implementation of the unified social credit number system, newly established legal persons and other organizations shall be assigned a unified social credit number at the time of registration. In the case of the legal persons and other organizations that have been established, the unified social credit number shall be changed through appropriate means, in order to achieve the full coverage of all legal persons and other organizations.
The fifth one is coordination. The unified social credit number is the same for legal persons and other organizations, and for natural persons (citizen identity card number). It is always composed by 18 digits.
The unified social credit number is equivalent to an ‘identity card number’ for legal persons and other organizations. Its vector is the registration certificate of legal persons and other organizations. Legal persons and other organizations have a unified social credit number registration certificate, as a legally valid proof of their identity, in order to handle relevant matters before government departments and financial institutions.
It provides important support measures to deepen the reform of the commercial system, and to realize the “three in one” and “one code for one licence”.
The implementation of the unified social credit number system is an important reform measure to promote the construction of the social credit system. It is an important support measure to deepen the reform of the commercial system and realize the “three in one” and “one code for one licence”.
For a long time, in China agency codes have not been unified. “Long codes” and “multiple codes” existed, there was a lack of effective coordination and information sharing, most of the codes only applied to the internal management of departments, the information data of some departments was separate from the other, there was the problem of “information Islands”, affecting the sharing of information and coordination between departments, increasing social costs and reducing administrative efficiency. At the same time, legal persons and other organizations while fulfilling their establishment procedure and other relevant procedures needed to apply for a code to several departments. Some departments charged fees, which not only was inconvenient to productive and business activites, it also increased their burden.
What is the significance of establishing a unified social credit number system?
First, its usefulness to the sharing and use of information.The unified social credit number is equivalent to an “identity card number” of legal persons and other organizations.Through the use of a unified social credit number, government departments and the public can effectively identify the main subject, and conduct related analyses of information associated to the number. This creates the basic conditions to realize information sharing and use.
Second, its usefulness in improving administrative efficiency, and reducing social costs.The unified social credit number is the basis and the premise to promote the reform of the commercial system, and to realize the “three in one”, and “one code for one licence”. After the reform, instead of multiple codes there will be only one code, instead of multiple applications there will be only one application, procedures will be simplied, saving time and costs, and further stimulating market innovation and entrepreneurship.
Third, its usefulness to accelerate the construction of a social credit system.Credit information is the foundation and key of the construction of a social credit system. Through the unified social credit number, information records scattered across various regions, departments, and fields, will be collected and listed under the name of the subject, forcing a coplete and unified credit record on the market subject, and creating the conditions to praise integrity, and punish the dishonest.
Fourth, its usefulness to further promote government streamlining and decentralization, reorganization, and the optimization of services. To strengthen ex ante and ex post supervision of, and services to market subjects, full use must be made of the concept and technology of big data. Through the unified of social credit number, information sharing among various regional and government departments will be promoted, in a way which integrates with information sharing in the social and market fields, forming a pool of available big data to provide support and protection for government supervision and the provision of services.
By the end of 2017 transition to the unified social credit number will have been completed.
How can a unified social credit number be applied for?
Once their registration is complete, newly established legal persons and other organizations will have their unified social credit number issued by the department for industry and commerce where they were registered (industry and commerce, civil affairs, institution establishment departments), and printed on their registration certificate.
In the case of existing legal person and other organizations, the registration management department will first generate a unified social credit number through its information system. It will establish a “one to one” correspondence relationship between the social credit number and the existing registration code. Then, it will gradually issue the unified social credit number to legal persons and to other organizations by changing their registration record and through other means. The unified social credit number will be printed on the new registration certificate.
After implementation of the “Outline”, all relevant departments will have completed the transition to the unified social credit number. Departments where the transition is difficult to complete in the short term will enjoy a transitional period, which will end by the end of 2017. During the transitional period, the unified social credit number and the present code will coexist, and all registration departments will promptly establish a mapping relationship between the social credit system number and the old registration code, to ensure that information on the national unified social credit information exchange platform and on other national platforms will be interconnected and shared. At the same time, during the implementation of the “Outline” the code of already existing legal persons and other organizations will be changed to the unified social credit system number, to gradually complete the storing of codes and the change in registration certificate. During the transitional period, old registration certificates that have not yet been changed will continue to be used.
After the transitional period, the organization code certificate and the registration code certificate issued by the registering department will no longer be used. They will all be replaced by a new registration certificate bearing the unified code issued by the registring department.
The “Outline” specifies how no fee is to be charged for the attribution of the unified social credit number to newly established legal persons and other organizations, and for the release of their registration certificate, as well as for the attribution of the unified social credit number to existing legal persons and other organizations. Departments for industry and commerce will begin implementation of the “three in one” and “one code for one licence” from October 1, 2015. Other registration authorities will begin implementation by the end of 2015.