Abstract
Chinese state capitalism is transitioning toward a panoptic, technology-assisted variant that we call “surveillance state capitalism.” The mechanism driving the emergence of this variant is China’s corporate social credit system (CSCS) – a big data project to evaluate the “trustworthiness” of all business entities registered in the country. The CSCS is linked to a system of corporate rewards and punishments, representing a futuristic strategy of automated screening to determine which enterprises are allowed market access and benefits. In this paper, we provide the first empirical analysis of the CSCS scoring system, based on its recent rollout in Zhejiang Province, one of the first to implement the CSCS at the local level. A key finding is that while the CSCS is a facially neutral means of measuring legal compliance, politically connected firms (regardless of their status as state-owned or private enterprises, or the extent of state equity ownership) receive higher overall scores in Zhejiang. The channel for this result is a “social responsibility” category that valorizes awards from the government and contributions to Chinese Communist Party (CCP)-sanctioned causes. We find no significant evidence that better-governed firms or more profitable firms receive higher overall scores, although highly leveraged firms, subject to higher default risks, are associated with lower total scores. These results underscore the potential of the CSCS to nudge corporate fealty to government and CCP policy. While our findings, based on the first available scores from a single province, have clear limitations, they provide an early window into the design characteristics, operation, and potentially far-reaching implications of the CSCS for the country as a whole.

Biography
Dr. Lauren Yu-Hsin Lin is an Associate Professor at City University of Hong Kong School of Law. Her research focuses on corporate law and governance. She employs empirical methods to dissect and understand the effect of different governance and regulatory measures on corporations. She has published articles on major topics in corporate governance, such as shareholder activism, securities class action, board independence, dual-class share structure and governance issues in state-owned enterprises. She has published with leading academic journals, such as the Journal of Legal Studies and Journal of Empirical Legal Studies, and has been interviewed by major media, including The Economist and Bloomberg, as a corporate law expert.