Fiscal Credit, Social Trust
China’s “Social Credit System” has been a topic of conversation in the West since 2015, when an ACLU article warned agains its potential dangers. However, the concept of a credit system clearly predates that — in the West and worldwide. What is the difference between different credit rewards systems and this one? As China approaches their desired implementation date of 2020, there’s good reason to believe that it will be coming up more and more in conversation.
First some linguistics -
China’s Social Credit System (SCS, 社会信用体系 or shehui xinyong tixi) can also be translated as “community faith system”. This translation is noteworthy because credence being placed on the credit aspect rather than the trust or faith interpretation. That the middle phrase is popularly translated as “credit” (信用 or xinyong), but can be also understood as “using truth” (xin means truth and yong “to use”). This perspective adds complexity to to a concept that currently has a solely financial interpretation. This translation bifurcation is just the beginning of difficulties that can be encountered translating China’s policies into English.
When SCS began (and the timeline forward)
The original plan for social credit was released in 2014. It wasn’t entirely clear what the project might ultimately consist of for the whole country, so each region took on their own planning and implementation. “They expected the different parts of the government, both centrally and locally, to try out their own approach in terms of implementation,” says Xin Dai, a professor and associate dean at China’s Ocean University Law School, who has researched social credit.
As a result of this local emphasis, each implementation looks very different. In terms of data collection, some regions rely more heavily on pre-existing records, while others employ watch-guards to maintain surveillance on individual’s actions and reactions. Repercussions range from an imposed audio clip of one’s poor social status on their ringback tone, to banning access to plane trips and fast-paced trains. Rewards for good social conduct range from honorary recognition to no-interest loans.
SCS is due to go nationwide by 2020, and the country is already banning millions of “blacklisted” individuals from purchasing plane or train tickets. The country has been working closely with organizations that already have information on their citizen’s history, from pulling criminal records to “Sesame Credit”, whose data comes from Alibaba.
Motivations for SCS
The paper “Clear Sanctions, Vague Rewards”, written by a group of researchers at the Technical University of Munich in 2019, outlines 3 possible motivations for implementing the SCS.
Lack of Trust
With a rapidly accelerating economy (peaking at a 14.5% growth rate in 2014 according to the World Bank), some of China’s growing pains have been in the domain of reported trust issues. Predominantly this revolves around corporate and institutional trust in the last 2 decades — food poisonings, chemical spills, academic dishonesty etc¹. According to a survey conducted by Ipsos Public Affairs², “moral decline” was regarded as the most serious issue in China in 2017. 47% of Chinese respondents ranked it as one of the top 3 greatest concerns, while the same issue was only mentioned by 15% of total respondents worldwide.
Domestic Economy Boost
A big hope of the Chinese government is that SCS will give millions of Chinese citizens without a financial history access to credit and investment opportunities in the domestic market. This is huge! With such a massive population, China has the world’s largest number of unbanked citizens³. All individuals would use their personal trustworthiness score to obtain access to loan applications without any previous participation in the system, thus boosting the Chinese economy with domestic spending.
Confucian Principles
As the aforementioned paper describes, “the concept of personal identity is largely determined by Confucian principles, [wherein] personhood is supposed to extend from the private to the public sphere, thereby somewhat losing its private and public boundaries.” A basic, cultural underpinning of Chinese culture is communal (hence, Communism), which means that privacy can be seen as sneaky. Contrast this with a western focus on the individual, personal liberties and personal property, and the result is drastically different starting points. This understanding may help Westerners begin to understand why one study found that amongst Chinese citizens, 50% fully support and another 1/3 somewhat support an implementation of SCS. The SCS is not seen as a primacy-violating system in Chinese society, but rather something that can keep the community safer.
What it could look like
At present, the government is already connecting to private systems to produce their rankings. “You’ll have sort of memorandum of understanding-like arrangements between the city and, say, Alibaba and Tencent about data exchanges and including that in assessments of citizens,” writes Mareike Ohlberg, research associate at the Mercator Institute for China Studies.
The government is also connecting their rankings right back to private systems to ensure compliance. Remember those bans on plane and train purchases? That is a result of an interlinked information flow between transportation systems and governmental actors.
Additionally, as it has been for many years, the internet in China is highly censored. This means that each person’s cell phone number and online activity is assigned a unique ID number tied to their real name, making tracking much more swift and precise. And though it’s not mandatory, the China Credit website already encourages users to log in by scanning their faces.
China and the U.S. on Social Ranking
So what is the difference in SCS to various types of social rankings that take place in the US? After all, you can rank your Uber driver, they can rank you, and private data is being upturned at seemingly every corner. In the U.S., corporations have even been shown to use what’s called “e-credit” scores to market different products to their customers:
“You go to Capital One’s website, they infer based on your browsing information what kind of value as a customer you represent, and they’ll show you a different ad based on what I call your e-credit score. Not your actual credit score, because they don’t have access to that based on your profile information. But they kinda make up an ad-hoc credit score at the moment you arrive, and show you high-interest or low-interest advertisements.”
This might seem like an innocuous form of marketing, but these scores get traded or sold between entities and become a proxy for a person’s status and identity. This proxy is unknown to the user, whose information is being collected — without option for dispute. Despite this, it is then being used to justify actions that impact the individual, such as differing interest rate offers on loans.
In the world at large, there is a lot of data being collected with little protection, and no algorithmic transparency about how variables are being used, and then implemented at a large scale, threatening large populations. These are what Cathy O’Neil calls “Weapons of Math Destruction” (or WMDs), and we are seeing an increasing rate of them in the modern age. Which, yes, is deeply troubling when considering what privacy has meant for decades, and what it may mean in the near future. But what makes SCS so different for China from these instances happening in the rest of the world?
Mostly it is the systems in which they are occurring. The People’s Republic of China is an authoritarian country, the Chinese Communist Party has been responsible for human rights violations for decades. Obviously the current uprisings in Hong Kong point to some troubling undercurrents with regards to human rights, and reporting on Xinjiang in particular raises many questions about state-sanctioned ethnic cleansing. There seems to be partial reporting on many of these issues, perhaps in part due to cultural/language differences, but due in large part to governmental censorship.
This censorship is at the crux of the difference — in the West, however threatened or challenged, we maintain freedom of speech and a rich pool of perspectives to illuminate what is happening around us. Jay Stanley of the ACLU wrote a controversial piece on the burgeoning of SCS in 2015 that got a lot of pushback for reporting accuracy. However, the piece is still up and contributing to a deeper complexity around this topic for anyone with internet access. Freedom of speech and freedom of press are rights that, if exercised along with thorough research, have the potential to raise up consensus perspective and shape reality. If not exercised well, we all fall prey to losing the identity of national ideals (in this case, privacy and institutional transparency), and eventually allowing governmental structures the same liberties as proprietary entities — and vice versa.
For now, the world awaits the implementation of China’s Social Credit System in 2020, including the ripples it may add technological reform, governmental sanctions and privacy conversations worldwide.
References:
- Yanzhong Huang. 2012. Why is not there a bottom line for food security issue in China (Zhongguo Shipin Anquan Weihe Meiyou Dixian?) (in Chinese). https: //cn.nytimes.com/opinion/20120821/c21huang/
- Ipsos Public Affairs. 2017. What worries the world? https://www.ipsos.com/ sites/default/files/2017–08/What_worries_the_world-July-2017.pdf.
- Asli Demirguc-Kunt, Leora Klapper, Dorothe Singer, Saniya Ansar, and Jake Hess. 2018. The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. The World Bank
- https://www.wired.co.uk/article/china-social-credit-system-explained
- CSC more in depth — https://www.chinalawtranslate.com/en/getting-rongcheng-right/
- https://www.theglobeandmail.com/news/world/chinese-blacklist-an-early-glimpse-of-sweeping-new-social-credit-control/article37493300/
- https://www.nytimes.com/2019/04/14/technology/china-surveillance-artificial-intelligence-racial-profiling.html
- https://www.wired.com/story/china-social-credit-score-system/
- https://www.cybertrust.in.tum.de/fileadmin/w00bzf/www/papers/2019-FAT-Engelmann-Chen.pdf
