The National Development and Reform Commission (NDRC) recently issued the Notice on Improving the Government's Good Faith Contract Performance Mechanism and Optimizing the Development Environment for the Private Economy, which explicitly proposes strengthening the building of the government's good faith contract performance mechanism, focusing on resolving government dishonesty such as capricious policy changes, new officials ignoring old commitments, harming fair market transactions, and damaging enterprise interests, so as to promote the optimization of the business environment, enhance the investment confidence of private enterprises, and drive the development and growth of the private economy.

Government integrity is an important component of the social credit system. The government plays an exemplary role in credit building and directly affects the government's image and credibility.

How is information on breach of contract and dishonesty obtained and determined?

The Notice proposes establishing a mechanism for obtaining and determining breach-of-contract and dishonesty information at the source. Among other things, complaint channels for breach of contract and dishonesty will be kept open. The leading departments for social credit system construction at the provincial level shall, relying on channels such as their own credit websites, the State Council's "Internet Plus Inspection" platform, the Ministry of Industry and Information Technology's "Registration (Complaint) Platform for Defaults and Arrears Owed to Small and Medium-sized Enterprises," local 12345 government service hotlines, business environment complaint and reporting platforms, and petition departments, establish or improve special columns for complaints about breach of contract and dishonesty, to accept and collect complaints within their jurisdictions involving government departments (including organs and public institutions) regarding breach of contract and dishonesty.

It is reported that the scope of breach of contract and dishonesty includes breaches and repudiations by government departments in various agreements and contracts signed with private enterprises in areas such as government procurement, bidding and tendering, investment promotion, government-social capital cooperation, industrial support, and government investment.

At the same time, the provincial leading credit departments shall, as soon as possible, transfer the received and collected complaint leads on breach of contract and dishonesty to the superior department or competent department of the entity complained against for verification and determination. If verification shows that the situation is not true, the determining department shall be urged to promptly provide feedback to the complainant and offer a proper explanation; if the situation is true, the determining department shall be urged to immediately push for rectification, and if rectification is refused, the determining department shall confirm it as breach of contract and dishonesty. Failure to perform obligations on grounds such as institutional adjustment or personnel changes shall all constitute circumstances of breach of contract and dishonesty.

Regarding government credit records, the provincial leading credit departments will intensify the collection of government credit information and, in accordance with unified standards, share the determined breach-of-contract and dishonesty information in real time with the National Credit Information Sharing Platform; the NDRC will uniformly record breach-of-contract and dishonesty information, information on arrears sorted out by localities as required, and information on those listed as judgment debtors subject to enforcement under the names of the relevant entities to form government credit records; leading credit departments at all levels shall promote the inclusion of dishonesty records in the performance assessment and evaluation indicators of relevant government departments.

What punitive measures are there after dishonesty?

The Notice specifies that, for relevant entities with dishonesty records, the NDRC will, in accordance with regulations, restrict support from central budgetary funds, restrict applications for local government special bonds, and restrict recommendations for various financing projects; for cities at or above the prefecture level with government dishonesty records, the NDRC will cancel the qualifications of the development and reform system for awards and honors and pilot demonstrations, increase the deduction weight in urban credit monitoring, and cancel the title of Social Credit System Construction Demonstration Zone or the qualification to participate in the evaluation.

In addition, leading credit departments at all levels shall establish, by reference, a government dishonesty punishment mechanism and promote government departments at the same level to actively mobilize various types of dishonesty punishment measures within the scope of their functions, including but not limited to restricting government funding support, restricting applications for support policies, canceling awards and honors, and restricting participation in government procurement, so as to ensure that dishonesty is always punished. Where the determining department confirms that the dishonest conduct has been corrected and contractual obligations have been fulfilled, the relevant dishonesty records shall also be repaired in a timely manner and the dishonesty punishment measures imposed on the entity shall be terminated.

The NDRC will, through mechanisms such as communication and exchange with private enterprises, big data monitoring, and selecting representative private enterprises to establish monitoring points, intensify the monitoring and discovery of leads on government dishonesty, and, on a "discover and transfer immediately" basis according to the jurisdiction, list them for supervision and continuously track the handling progress.