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    Clipped Wings Force Defaulters to Pay Up

    Denial of travel privileges just the ticket for building trust in financial circles.

    Regulators have devised a crafty scheme to shame people into abiding by the law. In fact, it’s so effective that it’s helping China build a national credit blacklist.

    Folks who defy court rulings will be blacklisted and denied access to critical services, such as travel.

    When Liu, a 41-year-old logistics company owner from Suzhou, in China’s eastern Jiangsu province, became embroiled in a bitter wage dispute with his employees, they took him to court. The judge ruled in favor of the workers and ordered Liu to pay salaries in arrears, as well as compensation.

    Liu flat-out refused the order. But his defiance soon landed him on a blacklist proposed in 2013 under the auspices of the Supreme People’s Court and China’s top economic planning agency, the National Development and Reform Commission (NDRC). People found to be engaged in “dishonest behavior,” including the nonpayment of fines or loans, can find themselves blocked.

    But not all on the list are financial defaulters. In May, a single mother from Chengdu, the capital of southwestern China’s Sichuan province, was barred from buying high-speed train tickets and other big-ticket consumer goods because she had refused to honor child visitation rights granted to her husband by the courts.

    The blacklist’s reach extends beyond air and rail. Offenders can also encounter difficulties when registering companies, booking certain kinds of hotel accommodation, and applying for civil service jobs.

    At first, Liu was nonchalant about his blacklisted status. “It didn’t bother me until a few weeks later, when I found out I wasn’t allowed to buy an airline ticket,” he told Sixth Tone.

    With a bit of further research, Liu discovered that being on the blacklist would have profound implications. “I wouldn’t get loans from banks, and neither would my company,” he said. “My immediate feeling was that I needed to pay the wages and compensation.”

    China lacks a robust national credit rating system. One estimate puts the number of people without a credit record at half a billion.

    But in recent years, some progress has been made toward establishing what is being referred to as a “national social credit system,” which aims to build up character profiles of Chinese citizens so that, once available, they can help determine an individual’s creditworthiness.

    Liu discovered that he had been added to the credit blacklist when he entered his name and personal details while purchasing an airline ticket online: A message popped up to inform him that he was banned from air travel, he told Sixth Tone.

    Liu declined to give Sixth Tone reporters his full name, citing privacy concerns.

    Speaking at a press conference in Beijing last week, Lian Weiliang, vice director of the NDRC, said that since the introduction of the blacklist system, 4.9 million air passengers and more than 1.6 million railway passengers had been denied travel.

    Lian added that the Industrial and Commercial Bank of China (ICBC), one of the country’s largest banks, had declined more than 2,800 loan applications and around 210,000 credit card applications as a result of using the credit system.

    Liu Junhai, a law professor and director of the Business Law Center at Rennin University in Beijing who has no relation to the blacklisted Liu, said that such a database represented an effective and important tool for evaluating creditworthiness.

    Last month, some of China’s largest technology and internet companies, including Alibaba, Tencent,, and Baidu, agreed to share data about e-commerce-related concerns such as fake reviews with the NDRC as part of a bid to further refine the credit system.

    For Liu the entrepreneur, the experience of being blacklisted lasted a total of three months, although clearing his name took just one week after he finally paid up. Still, it’s one Liu doesn’t want to repeat. “It was so embarrassing,” he said. “I felt like I had been abandoned by society.”

    Liu appears to have mended his ways. “It taught me a lesson,” he said. “I need to maintain a good credit record because it’s closely related to my reputation and career.”

    With contributions from Zhang Liping.

    (Header image: People wait to check in for flights at Shanghai Hongqiao International Airport, Nov. 6, 2014. Yong Kai/Sixth Tone)