On September 5, the Central Committee of the Communist Party of China and the State Council issued the ‘Guiding Opinions on Carrying Out the Quality Improvement Action’ (official document here). The 10,000 characters document is a blueprint providing a detailed list of measures to transform China into a ‘Quality Powerhouse’.
By 2020, China intends to:
improve quality in products, projects and services, to boost the global competitiveness of Chinese brands, products, and services;
Improve the quality of its industrial development, to give life to world-class industrial clusters;
Improve quality in all regions, to facilitate the survival of traditional quality brands, and the emergence of regional quality brands;
Construct a national quality infrastructure based on measurements, standards, and certifications to enhance China’s global competitiveness, and reinvigorate its external relations.
The ‘Guiding Opinions’ enumerate each one of the measures that should contribute to achieving these objectives. The concrete mechanisms China will use to translate these policy goals into practice are still to be determined.
What is certain is that the Quality Improvement Action will involve a series of sustained efforts which will impact agriculture, equipment manufacturing, the raw materials industry, construction projects, the service industry, foreign trade, and IPR protection over the next twenty-four months.
Social credit mechanisms will play an important role in reshaping of each one of these sectors in ways favorable to the emergence or the consolidation of global Chinese products and brands. The ‘Guiding Opinions’ addresses at least some of the most widely shared domestic concerns about social credit, as these relate to quality, information security, and privacy protection in various fields.
The social credit mechanisms listed by the ‘Guiding Opinion’ are:
“§ 5 Promoting Improvements in the Quality of Consumer Goods
– Strengthen the information security and privacy protection of smartphones, wearable devices, and new generation audiovisual products.
§ 16 Strengthening Comprehensive Quality Supervision
– Establish a sound system to record and publicize misconduct in the field of quality.
– Intensify the strength with which information on administrative punishment is publicized by the government.
– Establish a system to share information on the recall of defective products, and for coordination among government departments.
§ 19 Accelerating the Construction of a National Quality Infrastructure System
– Establish a feedback and evaluation mechanism on information about compliance with standards.
§ 24 Providing a More Robust Financial and Banking Support
– Construct a quality credit financing system, explore a quality credit financing system centred on a comprehensive competition in quality, where the level of quality, of standards, brand value etc. will be included among the reference factors of enterprise credit rating and loan distribution.
– Intensify joint punishment, and limit – according to the law – the participation in government procurement of enterprises violating legislation on quality and breaching trust.”1
Mechanisms as publicizing information on administrative punishments levied on companies, their directors, supervisors, and senior managers, restricting certain activities, etc. exist already. Their use in the broader field of quality, however, is an entirely new development, likely to have significant effects. Having been enacted at a time when Huawei has already overtaken Apple as the second biggest producer of smartphones, the Guiding Opinions are not to be ignored.