China is set to assign government officials to work with 100 private companies, including eCommerce giant Alibaba, to “boost the local manufacturing industry,” according to Reuters.
The country’s top technology hub Hangzhou will be assigning government officials to work with 100 local companies in the eastern province of Zhejiang. The move appears to be proof that the government is becoming more involved in the private sector, especially with growing concerns over China’s trade war with the United States.
The 100 companies were not named, but state media reports said Alibaba and auto maker Zhejiang Geely Automobile Holdings are included in the list. Despite the news, Alibaba said it plans to proceed with business as usual.
“We understand this initiative… aims to foster a better business environment in support of Hangzhou-based enterprises,” Alibaba said in a statement. “The government representative will function as a bridge to the private sector, and will not interfere with the company’s operations.”
This move follows the introduction of business ratings in the country, with around 33 million businesses already evaluated and ranked on a scale of one to four.
“The unified rewards and punishment system significantly increases the potential for one violation to snowball across your operations until you have this avalanche of penalties that make it impossible to operate until you solve that one thing,” said Kendra Schaefer, head of digital research at Trivium China.
And just this week, it was revealed that the government’s social credit system will also be impacting American firms doing business in China. Companies refusing to cooperate will get “black marks on their records.” United, Delta and American Airlines, for instance, were instructed to change their websites to say that Macau, Hong Kong and Taiwan were part of China.
“It’s supposed to affect the decision making of businesses to conform to what the party wants,” said Samantha Hoffman, a fellow at the Australian Strategic Policy Institute.