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China's Social Credit System | |
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< | -- By EthanChuang - 18 Mar 2022 | >
> | -- By EthanChuang - 8 May 2022 | | | | | | | |
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| | | Introduction – What is China's social credit system? | |
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< | China’s social credit system (SCS) is the government’s attempt to promote trustworthiness and punish untrustworthiness among citizens within China. While many Western articles have compared the SCS to a dystopian social rating system, the SCS is quite different. Rather than comparing the SCS to a rating system, it is more like a “big idea, and more of a policy or ideology of data use.” Moreover, “social credit” is a “working term” or an “umbrella category” that covers broad policy agendas. These agendas are implemented as national initiatives and city-level pilot projects. They exist more as a “patchwork of regional pilots and experimental projects” that are far from being implemented on a national level. The SCS is therefore not one coherent and national system of calculating an individual’s value in society.
How does the social credit system work?
Purpose: Trust Building
The purpose behind China’s SCS is to address legitimate issues of trust within society. One type of trust issue is financial credit. Unlike companies and individuals in the United States, most people in China do not have FICO scores nor credit histories. As such, Chinese financial institutions do not have a unified metric for determining whether a potential borrower is trustworthy. Additionally, China faces a “trust deficit” problem. The consumer market is poorly regulated, and counterfeiters regularly sell fake or contaminated products. For example, the 2008 Chinese contaminated baby milk scandal injured nearly 300,000 infants. As such, the SCS is China’s attempt to increase trust in the government’s ability to condemn and prevent these economic and social ills. | >
> | In its current iteration, China’s social credit system (SCS) is not a dystopian social rating system, as some Western articles have dubbed it. “Social credit” is a “working term” or an “umbrella category” that covers broad policy agendas. The purpose behind China’s SCS is to address legitimate issues of trust within society. One type of trust issue is financial credit. Unlike companies and individuals in the United States, most people in China do not have FICO scores nor credit histories. As such, Chinese financial institutions do not have a unified metric for determining whether a potential borrower is trustworthy. | | | | |
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> | Additionally, the SCS has been implemented through experimental projects across multiple cities. While the social credit is a national policy, it is not implemented on a national level. So, in its current form, the SCS is rather benign and disjointed. However, Chinese residents should certainly be wary of what the SCS can become. Recently, the Chinese government has issued policy documents that suggest it will remedy the SCS’s deficiencies and enable the CCP to use it for national security purposes. The discussion below will analyze the SCS in its current form and discuss why latter iterations of the SCS are concerning. | | | | |
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< | Unified Identification Numbers
One key feature of the SCS is the government’s ability to gather information on and track an individual or corporation. To do this, the government must consolidate data and label it with a standardized identification number. The Chinese government has accomplished this by using individuals’ national identification number—like US social security numbers—and assigning organizations with their own identification numbers. For individuals, the primarily tracks credit files. And for companies, the government records data like administrative penalties, permits, and blacklist information. Although the government uses standardized identification numbers, there is still no unified credit score. National and local platforms still use different evaluation and rating systems.
Blacklists
Blacklists are the government’s primary method of enforcement within the SCS. When individuals break the law or companies violate industry regulations, the government labels them as “untrustworthy” and places them on a blacklist. Blacklists are often used to punish “judgment defaulters,” often people who have not repaid debts. By posting these lists publicly, the blacklists serve a punitive and deterrence function through public “naming and shaming.”
Moreover, blacklisted individuals and companies are subject to punishments that affect daily living or business endeavors. For example, blacklisted individuals may be restricted from traveling in first class train cabins, making high-end home renovations, or sending children to high-cost private schools. Blacklisted companies face heightened scrutiny during routine regulatory oversight and when applying for permits. The government may also restrict these entities from participating in government projects or accessing government benefits. This level of enforcement is possible because the government has issued interdepartmental agreements that enable interagency collaboration to enforce punishments. As such, punishments can be broadly enforced and potentially oppressive. | | | A Fragmented System | |
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< | As mentioned earlier, “social credit” is a big idea or catchphrase that covers broad policy agendas and has therefore bred a fragmented system. The SCS is designed to establish “trustworthiness” in China’s marketplace and financial and legal institutions. While the Chinese State Council has instituted a framework for the SCS at a national level, the SCS is still fragmented for several reasons. | | | | |
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< | Too Many Regulators
The SCS is administered through a disjointed legal system. Over 47 institutions, with different interests shape the SCS. These institutions include the National Development and Reform Commission and the People’s Bank of China. Moreover, the SCS seeks to regulate a an ambitious range of sectors including finance, environmental protection, and food safety. Additionally authorities at various regional and local levels write and implement unique regulations for their respective jurisdictions. Consequently, the large number of regulators and regulated parties has resulted in a fragmented system. | >
> | As mentioned earlier, “social credit” is a big idea or catchphrase that covers broad policy agendas. The breadth of this policy and lack of clarity has led to a fragmented system. | | | | |
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> | Too Many Regulators
The SCS is administered through a disjointed legal system. Over 47 institutions, with different interests shape the SCS. These institutions include the National Development and Reform Commission and the People’s Bank of China. Moreover, the SCS seeks to regulate an ambitious range of sectors including finance, environmental protection, and food safety. Additionally, authorities at various regional and local levels write and implement unique regulations for their respective jurisdictions. Consequently, the large number of regulators and regulated parties has resulted in a fragmented system. | | |
Decentralized Pilot Programs | |
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< | The SCS has been tested through a decentralized pilot program. Between 2018 and 2019, 28 model cities were selected to experiment with the SCS. While the national government provided central guidance, local authorities were given significant leeway. For example, different cities used the SCS to address different policy issues. Research shows that Shanghai primarily focused on food and drug safety while Ningbo focused on energy, industry, and construction issues. Moreover, local authorities were permitted to add their unique supplemental regulations, such as standards for blacklisting. Additionally, different cities used different evaluation systems, such as varying point scales and differing degrees of punishments. Because the SCS has been developed through in different cities, it is difficult to label China’s SCS as a unified national program. Further work is needed to consolidate data, standardize regulations, and implement a single program across China’s various cities and provinces. | >
> | The SCS has been tested through a decentralized pilot program. Between 2018 and 2019, 28 model cities were selected to experiment with the SCS. While the national government provided central guidance, local authorities were given significant leeway. For example, different cities used the SCS to address different policy issues. Research shows that Shanghai primarily focused on food and drug safety while Ningbo focused on energy, industry, and construction issues. Moreover, local authorities were permitted to add their unique supplemental regulations, such as standards for blacklisting. Additionally, different cities used different evaluation systems, such as varying point scales and differing degrees of punishments. Because the SCS has been developed in different cities, it is difficult to label China’s SCS as a unified national program. | | | | |
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< | Conclusion
While it is easy to label China’s social credit system as a dystopian system, critical observation compels us to draw a less extreme conclusion. “Social credit” is a broad policy agenda to build “trustworthiness,” and the SCS is currently fragmented. Nevertheless, broad policies with unclear regulations are likely to produce disproportionate levels of punishment. If the government can already prevent parents from sending children to certain private schools, how much farther may the government intrude in citizens’ private lives? Alternatively, will the use of identification numbers remain limited to financial credit scores, or will the government track additional information such as spending habits or even religious beliefs? Moving forward, researchers should continue to make critical observations on China’s development of its SCS. | | | | |
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I think the point of this draft is "this is not so bad at the moment." But why is the momentary measurement relevant? The purpose of the system is to provide ultimately for a complete despotism that will allow every detail of daily life to be calibrated with the degree of compliance individuals show with the wishes of the state. Have the wrong friends or say the wrong thing? Your mortgage rates go up and you can't buy train tickets at busy times. Is it fully in place now? No. Does the Party mean to achieve this the way it meant to achieve backyard steel forges and to kill all the sparrows in China? Yes. Is the madness of Xi more or less threatening to the future of humanity than the madness of Mao? More. Do you care? Maybe not. | >
> | Concerns
Despite the system’s incoherence, the SCS may still be used as a means of social control. On March 29, 2022, the General Office of the State Council published a new policy document regarding the SCS. There are two notable sections within this document that should be flagged. First, Section 19, “Strengthen Party Leadership,” reasserted the Chinese Communist Party (CCP)’s leadership over the SCS and encouraged developers to improve planning and coordination amongst the disjointed parts. Section 19 is important to highlight because it indicates that the CCP intends to centralize and consolidate the currently fragmented system. | | | | |
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< | This draft correctly determines that the early stages are not the finished product. I think the best route to improvement is to subject your defense based on its unfinished state to the test of the Party's intentions.
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> | Perhaps more concerningly is Section 23 because it explicitly connects the SCS to national security and new data privacy regulations. This is concerning because the CCP has notoriously used “national security,” and similarly ill-defined phrases like “counterterrorism,” to justify imprisoning Hong Kong activists and detaining Uighurs in Northwest China. Moreover, Section 23 explicitly mentions the Personal Information Protection Law (PIPL), a data privacy regulation enacted in 2021. The CCP has already used such regulation as “a show of force” against Chinese tech giants such as when it interfered with Alibaba’s Ant Group IPO. These actions indicate that the CCP intends to continue using law, regulations, and systems to centralize its ability to monitor and control individuals and corporations. | | | | |
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> | Case Study: Blacklists
One way the government controls individuals is through blacklists. Blacklists are mostly used to punish “judgment defaulters,” individuals or organizations who have the ability to, but have not repaid their debts. Blacklisted individuals are placed on a no-fly list or even restricted from sending their children to high-cost private schools. Blacklisted companies may be restricted from participating in government projects, accessing government benefits, or applying for permits. | | | | |
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Why aren't these links in the text? You are writing for the web, after all. Why not use it as intended?
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> | Enforcement of blacklists is one example of a central feature of the SCS—joint disciplinary action. The Supreme People’s Court’s Judgment Defaulter List is effective because 44 government departments have agreed to restrict services for people placed on the Defaulter List. These people can be tracked within the SCS because the government links blacklists to individuals’ national identification numbers —similar to US social security numbers. Once someone like a judgement defaulter is labeled as “untrustworthy” within the SCS, the government punishes that individual by interfering with their daily lives. While punishing tax and debt evaders is a common practice in many countries, the CCP has not articulated a limit to its ability to intrude an individual’s life. | | | | |
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> | Conclusion
China’s SCS is currently a fragmented regulatory system primarily used to govern the financial industry. And the SCS represents a broad policy agenda to build “trustworthiness” in China. Nevertheless, broad policies with ill-defined limitations are suspect. If the government can prevent parents from sending children to high-cost private schools, how much farther may the government go? Given the CCP’s track record of detaining and imprisoning individuals, such concerns are legitimate. While Western media’s portrayal of the SCS as a dystopian system is currently inaccurate, the world should continue to monitor China’s use of the SCS for oppressive behavior. | | |
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