When it comes to incentivizing delinquent payers to fulfill their obligations, China has taken matters to another level with its blacklisting and public shaming of millions of citizen debtors of various stripes.
According to media reports, the Supreme People’s Court of China recently announced its blacklist of 6.73 million citizens who have been banned from taking flights, while 2.22 million people can no longer travel by high-speed trains in the nation. The debtors list is comprised of people who are accused of taking advantage of legal loopholes to avoid paying debts from commercial and civil cases. (China lacks a personal bankruptcy law.) The government blocks the personal ID card numbers of the debtors that are needed to buy and check in for flights and trains, as well as stay at hotels.
As part of its social credit system, the Chinese government has opened an online search to the public for any such debtor, and even publicizes the debtors on LED screens and billboards—all in an effort to reign in the growth of debt that’s been accrued over the past several years, according to the gbtimes. For instance, household debt in the country has grown from 17% of GDP to 40% in recent years. According to credit insurer Atradius, the current economic slowdown in China will continue to lead to increasing overdue invoices and longer payment terms this year, while insolvencies are expected to rise further as well.
Individuals with commercial or personal debts can get themselves removed from the blacklist by paying back their debts.
– Nicholas Stern, senior editor