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Travel Ban? Not in US But in China: 6.7 Million Chinese Penalized for Not Repaying Debts

| Feb 20, 2017 12:44 AM EST

Zhou Qiang, president of China's Supreme People's Court, welcomes foreign ambassadors during the opening day of China's Supreme People's Court on Aug. 27, 2014 in Beijing, China.

Almost 7 million Chinese debtors were banned from taking flights and high-speed trains in the past four years as a penalty for not repaying their debts, China's Supreme Court announced.

The Financial Times said that the penalty is part of the country's efforts to establish a nationwide "social credit" system, which will rate citizens based on data collected on their financial, legal or social offenses.

The report said that the travel ban is considered to be the first step to build the structural links that will eventually lead to the implementation of a more comprehensive monitoring system.

"We have signed a memorandum with over 44 government departments in order to limit 'discredited' people on multiple levels," Meng Xiang, head of the executive department of the Supreme Court, said on Wednesday, Feb. 15. All big banks in the country, as well as the national public security bureau, are covered by the memorandum.

According to the report, China's High Court has been keeping a blacklist of "discredited" long-term debtors, who have been asked to repay their debts since 2013. All of the people in the list, with a total number of 6.7 million, have been banned from boarding planes and trains.

The system works by blocking the ID card numbers of debtors. The ID card number is used to buy tickets and check in for flights and trains and in hotels. The Supreme Court's website has the blacklist and anyone can search the list by entering his full name and ID card number.

Aside from non-payment of debts on time, one can also be included in the blacklist by making other offenses such as lying in court, hiding one's wealth and other crimes. On Tuesday, Feb. 14, the Supreme Court said it is adding new forms of penalties.

Due to the lack of a personal bankruptcy law and a comprehensive financial credit system, the government has been unable to implement financial penalties, which prompted the courts to implement a social credit system to manage bad debts, both personal and corporate.

Big data technology was used by fintech companies to collect information about a person's creditworthiness, the report said.

"The need for this comes from not having perfect institutions--there are plenty of ways to evade paying debts, so the cost of crime is low," Wang Zhicheng, a professor specialising in credit risk at Peking University, said.

Critics however said that the system was designed to impose social control and political loyalty.

"Creditworthiness, at any rate, is not the chief goal of credit records as far as the government is concerned," Anne Stevenson-Yang, head of J Capital Research, a Beijing based consultancy, wrote in a research note. "The credit system is seen as a broad government tool to achieve a range of normative goals."

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