China continues to implement an IT-based big data system of market regulation that rewards and punishes individuals and enterprises.

By Paul A. Davies and R. Andrew Westgate

China is currently implementing an innovative approach to monitoring, rating, and regulating the behaviour of market participants through a new “social credit system” (SCS) set forth in the Plan for Establishing a Social Credit System (the Plan). The Plan, first published in 2014, applies credit ratings across social, political, and environmental sectors. For example, a company breaching emissions targets will receive a lower rating (resulting in punitive measures, higher taxes, or other sanctions).

The Plan aims to implement a self-enforcing mechanism for regulation built on big data that monitors and evaluates economic and social behaviour using real-time feedback. The system is designed to incentivise companies to make decisions in line with laws, regulations, and governmental policy targets.

This blog will focus on the application of the SCS to environmental matters.