1 big thing: Blacklisting foreign businesses
China's push to implement a national social credit system attracts rapt attention around the world, though it is in its earliest stages — not yet influencing the daily lives of most Chinese citizens and largely opaque to outsiders.
But little noticed outside the country is that it's already affecting foreign businesses, which have been placed on blacklists or threatened with restrictions on market access.
The big picture: Five years ago, China announced that it intends to build a comprehensive system for tracking the reputations of every individual and firm throughout Chinese society, with the groundwork in place by 2020.
- The ultimate vision is an apparatus that rewards trustworthy people and businesses, and punishes those who violate laws and norms defined by Communist Party authorities.
- Some of the earliest moves toward the goal have been focused on gathering and using information about businesses.
- Experts worry it could eventually allow China to strengthen its control over foreign companies and boost domestic ones, entrenching the new borders of a splintering world economy.
How it works: The current reality is a mess of programs administered by cities, provinces and the central government, and little certainty about who is in charge of knitting them together.
- They are largely driven by blacklists — a consequence for rule-breaking that often comes with a penalty — and "redlists," a marker of good reputation.
- Punishments and penalized behavior vary from industry to industry.
Officially, the system targets corruption and bad business practice. But experts worry that China, often accused of anti-competitive measures, could use blacklisting to legitimize arbitrary punishments against non-Chinese businesses.
- It will likely be used "to bend entities outside China’s borders towards the [Chinese Communist] Party’s political objectives," said Samantha Hoffman, a fellow at the Australian Strategic Policy Institute, testifying in May before the House Intelligence Committee.
- Blacklists may "target foreign companies that are competing with Chinese companies or harming development of Chinese companies," said an analyst from consulting firm Verisk Maplecroft who asked not to be named.
According to translations of government documents that the U.S.–China Business Council (USCBC) shared with Axios, potential sanctions include:
- Restrictions on licensing and operating permits
- Increased police or regulator inspections
- Denial of government funding or tax breaks
- Being flagged as risky in search results
"There's not a lot of direct impact on U.S. companies yet," says Jake Parker, vice president for China operations at USCBC, which represents U.S. firms doing business in China.
But early credit-related punishments have businesses on edge.
- Last year, four U.S. airlines received letters from China's aviation ministry demanding they list Taiwan as part of China.
- Buried in the letter, translated by American Citizens for Taiwan, an advocacy organization, was a threat to "record … your company's serious dishonesty" in the Chinese social credit system.
- The airlines complied.
- A U.S. industrial chemicals company operating in China was told that it had to start prepaying its phone bill in person, Parker tells Axios, as result of an unrelated tax issue entered into the social credit system and shared broadly.
The Chinese embassy in Washington did not respond to requests for comment.
What's next: Down the road, if the systems are integrated and data is shared across cities, provinces and government agencies, businesses will find themselves even more closely watched and their actions reverberating throughout the country.
2. Siberia on fire
Fire is engulfing vast areas of Siberia in an inferno much larger than the crisis in California last year.
Already, some 7 million acres of forest and other land have burned in Siberia, compared with 1.9 million in all of last year in California.
- President Vladimir Putin has dispatched military aircraft and helicopters to help fight the fires, reports the NYT's Ivan Nechepurenko.
- Authorities were largely letting the blaze burn itself out while fielding 2,850 firefighters and 21 airplanes to bring it under control in an area of 450 square miles, 4% of the affected area.
- There are no reported injuries or deaths.
3. Celebrating the ice cream sandwich
In the U.S., tomorrow is National Ice Cream Sandwich Day, the 120th birthday of the scrumptious, hand-size treat, according to lore, reports the Boston Globe's Devra First.
- Its public debut came on a pushcart in New York's Bowery district, First writes, and received headline treatment in the New York Mail and Express.
- “There are ham sandwiches and salmon sandwiches and cheese sandwiches and several other kinds of sandwiches, but the latest is the ice-cream sandwich," the newspaper reported in 1899.
- And so began a mania that stretches out to today — at least in my house, where my daughters bicker over the box and finish it off seemingly minutes of its appearance in the freezer.
4. Worthy of your time
5. 1 fun thing: Scooter data
Last week, Erica ranked the 5 scooter options in D.C. based on how comfortable and easy they are to ride, and she said Bird was far-and-away the best.
- Erica writes: But I didn't consider one very important thing — price. That's because it seemed to me like they are all pretty equal. Turns out they aren't. Future reader Ned Ukrop sent me a note with some data (charted above).
"If you factor in pricing, Bird is simply not worth the 'smoother' ride in my opinion. Instead, my chart will show that if your ride is 10 minutes or less, you are best off taking a JUMP. If your ride is 10 minutes or more, then Lyft and Spin are the most economical options."— Ned Ukrop, Washington D.C.
Thanks for reading!