China’s New Social Credit System


Chinese City


Reports from China indicate that the Chinese Communist Party intends to use a “social credit score” in order to ban citizens from trains and planes.

According to Reuters, China’s National Development and Reform Commission’s website on Friday posted statements indicating that people and businesses would be put on so-called “List of Dishonest People” - the Supreme People's Court blacklist. “[T]hose found to have committed acts like spreading false information about terrorism and causing trouble on flights, as well as those who used expired tickets or smoked on trains” would be added to these lists, along with “employers who failed to pay social insurance or people who have failed to pay fines”.

This is a continuation of a trend from China to move towards using social credit scores. In early 2017, for example, the country’s Supreme People’s Court said during a press conference that 6.15 million Chinese citizens had already been banned from taking flights for social misdeeds.

The history behind these moves is tied into two main factors: the lack of a national credit score system, and the shift from cash to apps for payments. During the past 30 years, China has grown to become the world’s second-largest economy without much of a functioning credit system at all. The People’s Bank of China, the country’s central banking regulator, maintains records on millions of consumers, but they often contain little or no information. Until recently, it was difficult to get a credit card with any bank other than your own. Consumers mainly used cash. As housing prices spiked, this became increasingly untenable. So in the urban centers of China, because of this increased pressure on cash and the difficulty involved in credit, cash became largely replaced by smartphone apps like Alipay and WeChat Pay.

Alipay works with a QR system and has enabled transactions to happen simply and ubiquitously. Housing, utilities, transportation, and groceries are all primarily purchased through these types of apps. The practice has become so commonplace, even beggars are printing out QR codes and setting them out on the street. The app is part of a whole suite of apps, under the umbrella of Alibaba, and with it includes social media sharing and other functionality.

Eventually, the app makers realized they could harvest the information from payments and use them to create a social credit score. “It was a very natural process,” says You Xi, a Chinese business reporter. “If you have payment data, you can assess the credit of a person.” And so the tech company began the process of creating a score that would be “credit for everything in your life.” Soon Alipay released an app, Zhima Credit, based on these concepts.

The system works by assigning a score based on several factors, like your payment history and the scores of your circle of friends. An article cites Chen Chen, a 30-year-old illustrator from Shanghai, discussing her relatively high score. “They will check what kind of friends you have,” she said. “If your friends are all high-score people, it’s good for you. If you have some bad-credit people as friends, it’s not nice.”

Not surprisingly, the Chinese government announced it was developing what it called a system of “social credit” soon afterward. The aim is for every Chinese citizen to be trailed by a file compiling data from public and private sources by 2020, and for those files to be searchable by fingerprints and other biometric characteristics. The State Council calls it a “credit system that covers the whole society.” To aid in the task, the government has enlisted Baidu, a big tech company, to help develop the social credit database by the 2020 deadline.

For the Chinese Communist Party, social credit is an attempt at a softer, more invisible authoritarianism. The goal is to nudge people toward behaviors ranging from energy conservation to obedience to the Party. Samantha Hoffman, a consultant with the International Institute for Strategic Studies in London who is researching social credit, says that the government wants to preempt instability that might threaten the Party. “That’s why social credit ideally requires both coercive aspects and nicer aspects, like providing social services and solving real problems. It’s all under the same Orwellian umbrella.”

As of January 2018, no comprehensive, nationwide social credit system exists, and very little firm information is available about how this system might work in practice. But reports are still coming out that the system has already been implemented, at least in part. Wired reports that Liu Hu, a 42-year-old journalist, opened a travel app to book a flight while in China. But when he entered his name and national ID number, the app informed him that the transaction wouldn’t go through because he was on the Supreme People’s Court blacklist.

In 2012, Facebook patented a method of credit assessment that could consider the credit scores of people in your network. The patent describes a tool that arrives at an average credit score for your friends and rejects a loan application if that average is below a certain minimum. The company has since revised its platform policies to prohibit outside lenders from using Facebook data to determine credit eligibility.

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