GOP senators concerned about new Chinese-imposed corporate system

U.S. Sens. Cory Gardner (R-CO), Thom Tillis (R-NC), Joni Ernst (R-IA), Todd Young (R-IN), Marsha Blackburn (R-TN), Jerry Moran (R-KS), and Rob Portman (R-OH) are among a bipartisan group of 25 senators who this week expressed concerns about a new Chinese system they say is designed to punish American companies.

“I have serious concerns about what China’s Corporate Social Credit System could mean for American workers and businesses,” Sen. Gardner said in a separate statement. “Our American values are not for sale — and that’s why we should track China’s efforts to coerce American companies into complying with their flawed system.”

The senators, who were joined by U.S. Sen. Mark Warner (D-VA), want the United States Trade Representative (USTR) to research and analyze the implications of the Chinese government’s Corporate Social Credit System (SCS), which they claim will dissuade American companies and workers from speaking out against the Chinese government, according to their Dec. 2 letter sent to USTR Robert Lighthizer.

The Chinese Communist Party in 2014 issued an outline for the unified algorithmic system, which will grade both domestic and international firms against more than 300 state-determined criteria, with the goal of “building a Socialist harmonious society,” according to the senator’s letter.

“In practice, we worry that many of the criteria envisioned under the Corporate SCS could be used to: coerce the onshoring of research and development by U.S. companies within China’s borders; require technology transfer or otherwise make it easier for Chinese interests to steal American intellectual property; and coerce American corporate support to China’s industrial and foreign policies,” the senators wrote.

All corporate data collected and processed through the Corporate SCS will be managed by a consortium of Chinese-based companies, and once fully operational, any firms scored below the threshold would face sanctions by multiple Chinese government agencies, according to the letter.

“In short, 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 lawmakers wrote.

While still being developed, the skeleton of the system is coming online and already poses “serious challenges for U.S. companies,” according to the senators, who urged the USTR “to ensure that this system is closely examined and considered in all relevant U.S. government reports.”

“The inequities and imbalances in our trade relationship with China are well-known,” said Sen. Portman. “China’s proposed corporate social credit system will only perpetuate those inequities and imbalances by using state-backed economic power to bend American companies, including their employees, to Beijing’s will.”