Connect with us


Speculation vs. Reality – The Diplomat



In 2014, the Chinese State Council released the “Guidelines of Social Credit System Construction (2014-2020),” outlining the goal of establishing a basic social credit system by 2020. Accordingly, as 2020 approached, a range of Western observers and media seemed to be panicking. Some influential voices proffered warnings that “by 2020, China’s rulers aim to implement an Orwellian system premised on controlling virtually every facet of human life.” The reality, at least at present, has turned out to be far more mundane.

Indeed, even the significance of the year 2020 has been long overstated. Although by 2019, analysts had begun to deduce that 2020 was not some magic date – the amount of progress by that time made it obvious that an altogether comprehensive and automated system would simply not be possible – many China watchers still believe that the social credit system is more developed than it is.

Today, the social credit system still remains a disjointed mix of ambitious national level targets and guidance, varying regional pilot programs, and scattered mass data collection mechanisms. Although there is a lot of information being collected, official documents frequently mention the need to “standardize credit information collection processes” and “share information” because centralization of the data has to date been limited. Even the most well-standardized databases are yet to be more than 90 percent complete.

That being said, the system is evolving rapidly. By the end of 2020 and during the early months of 2021, important national level notices attempting to standardize the definition and practice of credit have been disseminated thick and fast. Throughout last year, numerous social credit information catalogues were issued in an attempt to standardize data collection processes within specific sectors and regions. In December 2020, a first draft of a Social Credit Law was circulated for internal review. In January 2021, the National Development and Reform Commission released a national “standard” for credit information reporting, a measure intended to encourage cross-referencing and acceptance of social credit data between provinces. Meanwhile, the Central Committee of the Chinese Communist Party (CCP) issued a new roadmap to 2025 for the “construction of a rule of law society” in which the social credit system is set to play a key role.

Since the system may not yet be anywhere near its eventual form, the end of 2020 and the first key construction phase seems an appropriate time to reflect on and assess the current contours and the notable characteristics of development in its final year.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

Overall, by the end of 2020, the “corporate” aspects of the social credit system appear to be more advanced than other strata of use, including government self-discipline and the discipline of individuals. A recent MERICS study showed that between 2003 and 2020, 73.3 percent of mentions in official documents identified “companies” as the targets of social credit, compared to just 10.3 percent for individuals. That does not mean that social credit will not grow in importance for the individual; it simply means that during its first phase, the “Corporate Social Credit System” has been the primary focus of government attention.

In the first half of 2020, something that received relatively little media attention was the flexible nature of social credit and the degree to which the rollout of social credit appears to have been shaped by the impact of the COVID-19 crisis. Social credit was utilized at both the national and provincial level as a key method to “nudge” business behaviors, firstly to encourage containment and to punish COVID-19-related crimes. Later, social credit was deployed to encourage the resumption of work. Incentive schemes abounded, such as one launched in Weihai (Shandong province) awarding “special points” (海贝分) to the credit records of the top four local enterprises that resumed work with good quality pandemic prevention measures in place.

The pandemic in turn was also utilized as an opportunity to cement the importance of social credit, with COVID-19 relief measures explicitly linked to social credit standings for the first time. For example, in April 2020, relief measures (in this case regarding the waiving of migrant workers’ usual deposit) were announced for eligible construction companies with good social credit records resulting from paying workers on time. The third notable innovation during this time was the creation of COVID-19 protections for social credit. The State Administration of Taxation also made it clear that taxpayers who delay filing or submitting relevant materials due to the impact of the epidemic could be exempt from administrative penalties or any impact on their social credit records.

In the second half of 2020, as China emerged from widespread lockdowns, the development of corporate social credit appeared to be less focused on COVID-19. Yet lessons learned during the pandemic were swiftly incorporated into the social credit system. For instance, QR codes closely replicating track-and-trace health app functions were introduced, allowing consumers to check the credentials of enterprises and staff in certain sectors identified as lacking high industry standards, including housing rental and housing services.

Social credit still retained a flexible quality. It was deployed for a range of purposes, from finance to traffic control. Rollout was also uneven, varying considerably from industry to industry and province to province. Even at the local level, pilot programs were initiated in specific districts to test out new social credit measures.

By categorizing and counting national and provincial documents from the State Council and Credit China, the primary (but by no means only) platform for Chinese social credit, according to the relevant industry affected, we observed that during the second half of 202,0 corporate social credit developments occurred far more frequently in certain industries than others. The construction, housing, property, and rental markets were targeted in the highest number of official documents. Second to this were – perhaps unsurprisingly given the ongoing pandemic – the domestic cleaning and healthcare industries. The transport sector and cross-sector environmental monitoring and compliance were similarly the target of a large number of social credit notices and schemes at both national and provincial levels.

There was, and still appears to be, a huge disparity between provinces in terms of their development of corporate social credit and indeed, social credit in general. As of December 2020, more than 80 percent of all the provinces, autonomous regions, and municipal cities had issued or were preparing to issue local credit laws and regulations. However, while some provinces seem to have only paid lip-service to the notion of an actionable rollout, others have followed these local credit laws with reams of tailored and tangible announcements, regulations, and articles. In terms of numbers of follow-ups, we can identify two significant clusters – one northern and one eastern – that far outstrip other provinces. In the east, Zhejiang and Jiangsu are most advanced, with the latter releasing 53 relevant documents on credit management and integrity construction for a variety of sectors since 2014. In the north, Shandong, Hebei, and Heilongjiang have all made significant leaps forward in the second half of 2020 to put social credit into action locally.

There have also been several national level departments that have appeared to lead the way in developing the credit system, while others appear to have much less involvement. In 2020, the Ministry of Transport, the State Taxation Administration, and the General Administration of Customs, to name a few, reported remarkable achievements in setting standardized data collection processes, comprehensive scoring criteria, and clear processes and implementation of related rewards and punishments. For example, the General Administration of Customs offered significantly lower customs inspection rates for general enterprises than discredited enterprises in 2019 (2.44 percent vs. 84.76 percent, respectively). On closer inspection, many of these departments had already implemented their own regulatory compliance scoring systems long before the social credit system came into being, meaning that they only needed to make slight adjustments to their existing systems to get to where they are today, while others still have a long way to go.

Despite the uneven contours of development, it was still possible to ascertain some recurring trends. A key theme in 2020, which emerged across the corporate social credit system, included the promulgation of the credit notification commitment system, which is being used to streamline previously laborious government administration processes. Digital means are increasingly being adopted to accelerate applications and approval processes, in many cases allowing those without a tarnished credit record to submit certain documents at a later date than other applicants. There were also a few noticeable reoccurring topics, such as the regulation of e-commerce, COVID-19, intellectual property, and production/consumer safety, closely aligning with national level development priorities.

Throughout 2020, there was also a notable trend toward regional credit cooperation, particularly in priority economic zones, with information integration between Shanghai, Jiangsu, Zhejiang, and Anhui forming the basis of the “Yangtze River Delta Credit Platform,” while significant progress has been made in standardizing credit information collection and recognition across the Beijing-Tianjin-Hebei region, where 2.48 million unified social credit codes were publicized. Meanwhile, there has been a continued focus on enhancing processes for credit repair, which is likely to come as good news for local and international firms alike who can expect more transparent credit appeal processes going forward. However, many questions exist regarding the extent to which databases are being integrated at a national level and how transparent and reliable the credit repair mechanism is.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

It may come as a surprise to many in the West who read of China’s plans to apply social credit to all spheres of society that China’s social credit system is in fact said to be an extension of bond issuance risk assessment credit ratings introduced in China in the 1980s, notably just as China’s finance industry was becoming increasingly integrated with the international banking system. Fast forward to today, these same principles are being applied to provide loans to small and medium enterprises (SMEs) via the social credit system. Specifically, the central government offers risk assessment models that leverage social credit data to measure the viability of lending to encourage banks to offer greater loan access for SMEs. There has been a push to expand the rollout of this initiative throughout 2020, which is not surprising given China’s national priorities to stabilize employment and support small businesses throughout the pandemic.

At the end of 2020, social credit watchers waited in anticipation for the release of a sequel to the 2014 social credit construction guidelines, but nothing has materialized to date. When a sequel is released, we expect many of the existing trends monitored will continue to be key priorities for the system’s development in the short term: Increased standardization of processes; greater information sharing across departments and regions; more joint rewards and punishments; and continued efforts to enhance the credit repair mechanism.

Yet even once important strategic parameters of the second phase are laid out in written form, the flexible nature of social credit as an implementation mechanism – as we witnessed during the COVID-19 pandemic – means that the system may continue to develop in unexpected ways. The social credit system may well move in a new direction to support China’s wider development goals and priorities, whatever they may be, or even taken a back seat as other national initiatives are prioritized.

Over the next five years, and likely well beyond, social credit is set to be used as a tool to improve the government’s economic governance capacity and domestic market conditions, as a means of promoting fair competition, strengthening market supervision, and encouraging law-adherence. In the long term, it is clear that social credit fits into the CCP’s grand designs for “data-driven governance” covering all spheres of society. What remains unclear is how integrated, far-reaching, and effective this system will be in practice and if, or how soon, we can expect ambitious social credit policy goals to turn into a reality.

Source link

Continue Reading


Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

Learn more:

Source link

Continue Reading


Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

Source link

Continue Reading


How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



Source link

Continue Reading