Several Views on Social Credit in China

At Wired, Mara Hvistendahl explores the history and still unclear future of China’s nascent national social credit system, due to roll out by 2020, and the various private schemes that may eventually feed into it, such as Zhima (Sesame) Credit, run by affiliate and Alipay operator Ant Financial. She describes the basic concept of social credit as “an attempt at a softer, more invisible authoritarianism” meant “to nudge people toward behaviors ranging from energy conservation to obedience to the Party.”

The State Council has signaled that under the national people will be penalized for the crime of spreading online rumors, among other offenses, and that those deemed “seriously untrustworthy” can expect to receive substandard services. Ant Financial appears to be aiming for a society divided along moral lines as well. As Lucy Peng, the company’s chief executive, was quoted as saying in Ant Financial, Zhima Credit “will ensure that the bad people in society don’t have a place to go, while good people can move freely and without obstruction.”

[…] ALIPAY KNOWS THAT at 1 pm on the afternoon of August 26, I rented an Ofo brand bike outside Shanghai’s former French Concession and rode north, parking it across from Jing’an Temple. It knows that at 1:24 pm I bought a snack in the mall next to the temple. It knows that afterward I got in a Didi car bound for a neighborhood to the northwest. It knows that at 3:11 pm I disembarked and entered a supermarket, and it knows (because Alibaba owns the supermarket, which accepts only Alipay at checkout) that at 3:36 pm I bought bananas, cheese, and crackers. It knows that I then got in a taxi, and that I arrived at my destination at 4:01 pm. It knows the identification number of the taxi that drove me there. It knows that at 4:19 pm I paid $8 for an Amazon delivery. For three sweet hours—one of which I spent in the swimming pool—it does not know my whereabouts. Then it knows that I rented another Ofo bike outside a hotel in central Shanghai, cycled 10 minutes, and at 7:11 pm parked it outside a popular restaurant. Because Ant Financial is a strategic investor in Ofo, Alipay might know the route I took.

[…] One possible scenario for a social credit partnership is that the central bank will oversee the development of a broader metric, like a FICO score, while letting companies like Ant Financial collect data to feed into that score. Whatever its eventual structure, the larger social credit system “will definitely be under the government’s control,” says You Xi, the reporter who wrote the book about Ant Financial. “The government doesn’t want this very important infrastructure of the people’s credit in one big company’s hands.” [Source]

Hvistendahl notes that "most Americans have dozens of scores, many of them drawn from behavioral and demographic metrics similar to those used by Zhima Credit, and most of them held by companies that give us no chance to opt out. […] I know more about Zhima Credit’s algorithm than I do about how US data brokers rate me." In a postscript on Twitter, she challenged the oft-cited comparison with "Nosedive," an episode of Netflix’s dystopian scifi series Black Mirror in which people trade ratings after every interaction:

Another examination of social credit, including its presentation in the media, discussion online, and gradual implementation, came this week from Mareike Ohlberg, Bertram Lang, and Shazeda Ahmed at MERICS. (CDT previously interviewed Ahmed about the system in February.)

Years of social credit policy planning and refinement signify that the Chinese government has embarked on a pathbreaking course to comprehensively regulate, rate, and steer the behavior of individuals and companies. As currently envisioned, it is a wide-reaching project that touches on almost all aspects of everyday life. Social credit scoring will not only affect Chinese citizens and companies but will likely also impact foreigners living and working in China as well as have consequences for foreign companies operating in the country. In addition, the provision of social credit scoring services from commercial players such as Alibaba and Tencent, who are simultaneously expanding their global reach, raises questions regarding the extent to which the Social Credit System will collect and use data generated outside of China’s borders. Finally, if considered successful, China’s Social Credit System may eventually even become a model for other countries in the future.

[…] The current implementation process can roughly be divided into two tracks: one, creating an overall nationwide framework for assessing both financial credit and moral integrity (new laws and regulations, institutionalizing basic structures for cooperation, setting common standards) and, two, experimenting with provincial, sectoral, and commercial pilots.

[…] However, authorities have sent ambiguous signals about the future of these [commercial] pilots. The People’s Bank of China decided not to grant official licenses to the eight private companies it originally gave permission to conduct social credit pilot testing in 2015, echoing the line of argumentation often found in news and social media that commercial players cannot be trusted. The three reasons the regulator provided for withholding licenses included all eight companies’ failure to adequately protect user , over-collection of data deemed irrelevant to credit scoring, and “conflicts of interest” given that the companies provide , fintech, and other services in competition with one another, a potential impediment to the centralized vision of social credit that would require these firms to share their proprietary data with one another. Thus, these pilots’ current status as well as their future fate remains unclear: Whether these private platforms will become integrated with the government-run side of the Social Credit System, allowed to continue operating independently or eventually be completely sidelined is an important open question regarding the future relations of state and private commercial actors in China. [Source]

For now, the authors write, implementation of the national system is focused on coordinating government departments and "publicly sanctioning individuals and companies that have been blacklisted for failing to comply with relevant laws and court orders." ("Red lists" of "outstanding companies and individuals" also exist, they note.) Such punishments range from public shaming to spending restrictions on "high-end" goods, travel, and children’s education. Hvistendahl cites the experience of blacklisted investigative journalist Liu Hu, who accidentally failed to pay a court-ordered fine for defamation. Liu’s case, along with that of lawyer Li Xialin, was also noted by Human Rights Watch’s Maya Wang in a Wall Street Journal op-ed this week. In both cases, Wang wrote, "penalties were exacted in wildly arbitrary and unaccountable manners," foreshadowing potential political abuse of the system in the future:

Apple CEO Tim Cook looks forward to a “common future in cyberspace” with China, he told the Chinese government’s World Internet Conference earlier this month. This was an embarrassing gesture toward a state that aggressively censors the internet and envisions a dystopian future online.

The experience of lawyer Li Xiaolin may give a taste of what that future looks like. During a 2016 work trip inside China, he tried to use his national identity card to purchase a plane ticket. To his surprise, the online system rejected it, saying he had been blacklisted by China’s top court. Mr. Li checked the court’s website: His name was on a list of “untrustworthy” people for having failed to carry out a court order in 2015. He thought he had resolved the issue, but now he was stranded more than 1,200 miles from home.

[…] How did Mr. Li get on the list? In 2013 he defended a man accused of rape. The lawyer gave a copy of his defense statement to the man’s family. Unknown to him, they posted it online. The alleged victim sued Mr. Li for defamation and won, and in 2015 a Beijing court ordered him to apologize. Mr. Li sent the court a written apology. He had forgotten the incident until he found himself blacklisted. He learned that the court inexplicably dismissed his apology as “insincere,” in part because he had dated it April 1. [Source]

Reuters’ Engen Tham and Adam Jourdan reported another blacklisting this week: that of the founder of flailing tech firm LeEco.

Jia Yueting had his name and ID number splashed on China’s defaulter website after failing to satisfy a court order to pay Ping An Securities Group (Holdings) Ltd more than 470 million yuan ($71 million), according to a notice dated Dec. 11.

The move underscores the abrupt fall from grace of one of China’s most prominent entrepreneurs, who created a tech empire ranging from a Netflix-like online content platform to a smart-car unit looking to rival electric car giant Telsa Inc.

[…] Being named on the list means a person can be restricted from frequenting luxury hotels, purchasing airline and high-speed train tickets, going to golf courses, sending their kids to expensive schools and even shopping online for luxury goods. [Source]

One close observer of the emerging social credit system is Jeremy Daum, editor of China Law Translate. In October, he tweeted that "media coverage of the Social Credit System is so bad its almost as alarming as the system itself." He expressed further frustration at the blurring of distinctions between official and corporate schemes and broader last week:

In one of several recent posts on social credit at the University of Nottingham’s China Policy Institute: Analysis blog, Flora Sapio, another close observer, focused on the less widely noted "systematic effort to monitor, quantify, measure, and rank corporate [rather than individual] behaviour":

Legal, contractual, and social responsibility compliance are rewarded through the enjoyment of preferential policies, which are differentiated by industry sector. Violations of safety standards, environmental legislation and so-called “breaches of trust” – also if perpetrated by suppliers of Western MNCs – are disclosed to the public, and punished with criminal and administrative sanctions of increasing severity. In a move which blurs the distinction between physical and legal persons, senior managers are held personally responsible for “breaches of trust” by corporate entities. Further erasing the border between China and ‘the rest’, the social credit system will soon apply to all legal entities involved in transnational economic cooperation with China.

[…] “Social Credit” is just one of the code-words used in Chinese political language. It is useful to refer to a complex governance mechanism. At the same time, its semantic betrays all the limits of “mere translations” not supported by an adequate decoding of the meaning carried by words, and by the transposition of such a meaning to a context familiar to us. [Source]

In another MERICS publication this week, Samantha Hoffman zooms out to show social credit’s role in "the Communist Party’s autonomic approach to managing state security":

is the management of the entire society, but it also requires the participation of the entire society. Participation does not describe a form of liberalization, but rather a more flexible form of complete control that incorporates both positive and negative reinforcement.

The concept of “responsibility” is key. Responsibility implies that every Chinese citizen, whether they are located inside or outside of the Party, is tasked with fulfilling the responsibility to uphold the Communist Party’s leadership. Technology will ideally enable the automation of responsibility. In fact, the “Social Credit System,” which monitors and rates citizens’ behavior from payment morale and traffic violations to comments on social media, represents the technological marriage of individual “responsibility” and social control mechanisms.

[…] Through social credit, society would be co-opted to participate because the same technology is directly linked to conveniences that improve everyday life, for instance electronic payment. At the same time, society would also be coerced to participate, for instance by self-censoring online. Not participating could have consequences not only for the individual but also for their personal networks. [Source]