Social Credit System
|Social Credit System|
The Social Credit System (社会信用体系 shèhuì xìnyòng tǐxì) is a national reputation system being developed by the Chinese government. By 2020, it is intended to standardise the assessment of citizen's and business's economic and social reputation, or 'credit'. As of mid-2018, it is unclear whether the system will be an 'ecosystem' of various scores and blacklists run by both government agencies and private companies, or if it will be one unified system. It is also unclear whether there will be a single system-wide social credit score for each citizen and business. By 2018, some restrictions had been placed on citizens, which state-media described as the first step toward creating a national social credit system.
- 1 Implementation by Chinese government
- 2 Implementation of technology platform
- 3 Implications for citizens
- 4 Implications for businesses
- 5 Geographic region
- 6 Criticism
- 7 Comparison to other countries
- 8 See also
- 9 References
- 10 Further reading
Implementation by Chinese government
Plan for implementation between 2014 and 2020
On June 14, 2014, the China's State Council issued an outline for the national social credit system, it was titled "State Council Notice concerning Issuance of the Planning Outline for the Construction of a Social Credit System (2014–2020)". Law scholar Rogier Creemers translated the document into English.
The plans shows the government wants the basic structures of the Social Credit System to be in place by 2020. The goal being "raising the awareness for integrities and the level of credibility within society." It is presented as a means to perfect the “socialist market economy” (完善社会主义市场经济体制) as well as strengthening and innovating governance of society (加强和创新社会治理). This indicates that the Chinese government views it both as a means to regulate the economy at a business level and as a tool of governance to steer the behavior of citizens.
The outline focuses on four areas: "honesty in government affairs" (政务诚信), "commercial integrity" (商务诚信), "societal integrity" (社会诚信), and "judicial credibility" (司法公信). The Chinese government's plans include plans for credit assessment for businesses operating in China.
The Social Credit System is an example of China’s “top-level design” (顶层设计) approach. It is coordinated by the Central Leading Group for Comprehensively Deepening Reforms.
It is unclear whether the system will work as envisioned by then, but the Chinese government has fast-tracked the implementation of the Social Credit System, resulting in the publication of numerous policy documents and plans since the main plan was issued in 2014. If the Social Credit System is implemented as envisioned, it will constitute a new way of controlling both the behavior of individuals and of businesses.
Progress of implementation (2013-present)
In 2013, the Supreme People's Court began a blacklist of debtors with roughly thirty two thousand names. The list has since been described a first step towards a national Social Credit System by state media.
In 2015, the People's Bank of China licensed eight companies to begin trial social credit systems. Among these eight firms are Sesame Credit, which belongs to the Alibaba Group, Tencent, as well as China’s biggest ride sharing and dating firms, Didi Chuxing and Baihe.com respectively. In general, multiple firms are collaborating with the government to develop the system of software and algorithms. The Supreme People's Court also began working with private companies. For example, Sesame Credit began deducting credit points from people who defaulted on court fines.
In 2017, no licenses to private companies were granted. The reasons are conflicts of interest, the remaining control of the government, as well as the lacking cooperation in voluntary data sharing among the firms that participate in the development. However, the Social Credit System's operation by a seemingly external association, such as a formal collaborative between private firms, has not been ruled out yet. Private companies have also signed contracts with provincial governments to set up the basic infrastructure for the Social Credit System at the provincial level.
As of March 2017, 137 commercial credit reporting companies are active on the Chinese market. As part of the development of the Social Credit System, the Chinese government has been monitoring the progress of third-party Chinese credit rating systems.
As of February 2018[update], no comprehensive, nation-wide social credit system exists, but there are multiple pilots testing the system on a local level as well as in specific sectors of industry. One such program has been implemented in Shanghai through its Honest Shanghai app, which uses facial recognition software to browse government records, and rates users accordingly.
In March 2018, Reuters reported that restrictions on citizens and businesses with low trustworthiness Social Credit ratings would come into effect on May 1st. By May 2018, several million flight and high speed train trips had been denied to people who had been blacklisted.
As of mid-2018, it is unclear whether the system will be an 'ecosystem' of various scores and blacklists run by both government agencies and private companies, or if it will be one unified system. It is also unclear whether there will be a single system-wide social credit score for each citizen and business.
Implementation of technology platform
It is unclear what technology will be used in the fully implemented system. As of mid 2018 only pilot schemes have been carried out. Some of the technology is provided by the Alibaba Group's Ant Financial which operates Sesame Credit. Alibaba is China’s largest conglomerate of online services, including the largest online shopping and payment providers.
The Chinese government aims at assessing the trustworthiness and compliance of each person.[clarification needed] Data stems both from peoples' own accounts, as well as their network's activities. Website operators can mine the traces of data that we leave and derive a full social profile, including e.g. peoples’ location, friends, health records, insurance, private messages, financial situation, gaming duration, smart home statistics, preferred newspapers, shopping history, and dating behaviour.[clarification needed]
Implications for citizens
From the program, the Chinese SCS will be fully implemented starting in 2020 and will be made mandatory for every citizen. Once implemented, every citizen will be rewarded, or punished, on the basis of their behavior. Some types of punishments can be: flight ban, exclusion from private schools, slow internet connection, exclusion from high prestige work, exclusion from hotel, registration on a public blacklist.
By May 2018, several million flight and high speed train trips had been denied. The people denied were on a blacklist. The exact reasons for people being placed on the list are unknown. Business Insider speculated that the reason could be the debtors list created by the Supreme People's Court.
Exclusion from private schools
If the parents of a child score below a certain threshold, their children would be excluded from the best schools in the region.
Also important, your personal score could be used as a social symbol on social and couples platforms. For example, China's biggest matchmaking service, Baihe, already allows its users to publish their own score. 
The rewards of having a high score include easier access to loans, easier access to jobs and priority during bureaucratic paperwork. Likewise, the immediate negative consequences for a low score, or being associated to someone with a low score, range from lower internet speeds to being denied access to job offers, loans and bureaucratic paperwork.
Implications for businesses
Among other things, the Social Credit System is meant to provide an answer to the problem of lack of trust on the Chinese market. Proponents argue that it will help eliminate problems such as food safety issues, cheating, and counterfeit goods. Building on that, China’s officially defined aim is to enhance trust and social stability by creating a “culture of sincerity”. 
For businesses, the Social Credit System is meant to serve as a market regulation mechanism. The goal is to establish a self-enforcing regulatory regime fueled by big data in which businesses exercise “self-restraint” (企业自我约束). The basic idea is that with a functional credit system in place, companies will comply with government policies and regulations to avoid having their scores lowered. As currently envisioned, companies with good credit scores will enjoy benefits such as good credit conditions, lower tax rates, and more investment opportunities. Companies with bad credit scores will potentially face unfavorable conditions for new loans, higher tax rates, investment restrictions, and lower chances to participate in publicly funded projects. Government plans also envision real-time monitoring of a business’s activities. In that case, infractions on the part of a business could result in a lowered score almost instantly. However, whether this will actually happen depends on the future implementation of the system as well as on the availability of technology needed for this kind of monitoring.
The Social Credit System will be limited to Mainland China and thus does not apply to Hong Kong and Macau. However, at present, plans do not distinguish between Chinese companies and foreign companies operating on the Chinese market, raising the possibility that foreign businesses operating in China will be subjected to the system as well.
The system has been implicated in a number of controversies. Of particular note is how it is applied to individuals as well as companies. People have already faced various punishments for violating social protocols. The system has been used to already block nine million people with "low scores" from purchasing domestic flights. While still in the preliminary stages the system has been used to ban people and their children from certain schools, prevent low scorers from renting hotels, using credit cards, and black list individuals from being able to procure employment. The system has also been used to rate individuals for their internet habits (too much online gaming reduces ones score for example), personal shopping habits, and a variety of other personal and wholly innocuous acts that have no impact on the wider community. Criticism of this program has been widespread with the proposed system being described by Human Rights Watch as "chilling" and filled with arbitrary abuses.
Vision Times lableled the system as mass surveillance tool and mass disciplinary machine.
Comparison to other countries
In 2018, the New Economics Foundation compared the Chinese citizen score to other rating systems in the United Kingdom. These included using data from a citizen's credit score, phone usage, rent payment etc. to filter job applications, determine access to social services, determine advertisements served etc.
In February 2018, Handelsblatt Global reported that Germany may be 'sleep walking' towards a system comparable to China's. Using data from universal credit rating system, Schufa, geolocation, health records etc to determine access to credit and health insurance.
- Mass surveillance in China
- Public records in China
- Reputation system
- Surveillance capitalism
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- The gamification of trust: the case of China’s “social credit” - http://www.emeraldinsight.com/doi/full/10.1108/MIP-06-2017-0100
- Propaganda Games: Sesame Credit
- Archive of articles and Primary Sources on Social Credit
- A Collection of Legal Documents on China's Social Credit System
- China's Social Credit System: A big-data enabled approach to market regulation with broad implications for doing business in China
- Cashless Society, Cached Data: Security Considerations for a Chinese Social Credit System