Colorado's U.S. Sens. Michael Bennet and Cory Gardner were among the 25 senators who sent a letter on Monday to the U.S. trade representative asking the Trump administration to present analysis of China’s Corporate Social Credit System in future trade reports.
“The Corporate SCS raises fundamental questions about whether promised market openings and regulatory reforms on paper will yield a level playing field in practice for American firms doing business in and with China,” the letter reads.
The senators worry the Chinese initiative will enable theft of American intellectual property and coerce companies into supporting China’s foreign and industrial policies.
As outlined in China Briefing, a publication from the Asia-focused consulting company Dezan Shira & Associates, the Corporate SCS is “an ambitious initiative to build a database that monitors individual, corporate and government behavior across the country in real time.”
The Chinese government will assign scores to companies based on their compliance with laws and regulations, and incorporate the quality of their products and services. Penalties for low scores include increased audits or inspections, ineligibility for incentives, and public shaming. Companies can also incur penalties for doing business with “blacklisted” organizations.
Conversely, there are rewards for high scores, which are less well-defined. The government plans to implement Corporate SCS in 2020.
While the system seeks to promote responsibility and has the potential to create a fairer environment for businesses in theory, the senators warned that the Communist Party could coerce compliance with its agenda through ratings of companies and individuals.
“As a punishment for individuals representing companies deemed ‘untrustworthy,’ the Chinese government envisions levying travel restrictions, tax discrimination, personal sanctions and other retributions,” they wrote. “In this respect, there are few punishments that can be ruled ‘off the table,’ as the Communist Party’s disregard for the rule of law, checks and balances, transparency, and a free press could result in a broad array of unjustified punishments.”
Gardner, who chairs the Senate Subcommittee On East Asia, The Pacific and International Cybersecurity Policy, added separately that "our American values are not for sale."