Social Credit System

The Social Credit System is a proposed Chinese government initiative[1][2][3] for developing a national reputation system. It has been reported to be intended to assign a "social credit" rating to every citizen based on government data regarding their economic and social status.[4][3][5] [6][7] In addition, it is also meant to rate businesses operating on the Chinese market.[8]

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 Small Group for Comprehensively Deepening Reforms.[8] According to the overall "Planning Outline for the Construction of a Social Credit System (2014-2020)" issued by the State Council, the Social Credit System will focus on four areas: "sincerity in government affairs" (政务诚信), "commercial sincerity" (商务诚信), "societal sincerity" (社会诚信), and "judicial credibility" (司法公信).[9] Media coverage has thus far focused mostly on the rating of individual citizens (which falls under "societal sincerity"). However, the Chinese government‘s plans go beyond that and also include plans for credit scores for all businesses operating in China.[8]

The Chinese government wants the basic structures of the Social Credit System to be in place by 2020.[9] 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.[8]

As of July 2017, no comprehensive, nation-wide social credit system exists, and very little firm information is available about how this system might work in practice.[10] There are, however, multiple pilots testing the system on a local level as well as in specific sectors of industry. Some reports have stated that the ratings may use information gathered from Chinese citizens' online behavior,[1] but existing scoring systems run by private companies using such data (such as Sesame Credit) are still in an experimental phase.[11]

The main plan

The main outline often mentioned in Western news outlet stories, the "State Council Notice concerning Issuance of the Planning Outline for the Construction of a Social Credit System (2014-2020)", was issued by China's State Council on June 14, 2014.[9][12] Rogier Creemers, a post-doctoral scholar at the Programme for Comparative Media Law and Policy at the University of Oxford[13], has posted a translation of the document.[9]

The goal of the initiative according to the Planning Outline is “raising the awareness for sincerity and the level of credibility within society.”[12] The Social Credit System is presented as an important 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).[12] This indicates that the Chinese government views it both as an important means to regulate the economy and as a tool of governance to steer the behavior of citizens.

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.[14]

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.[8]

Social credit for businesses

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.[8] 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.[8] 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.[8]

Involvement of private companies

As of March 2017, 137 commercial credit reporting companies are active on the Chinese market.[8] 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.[5] In 2015, eight companies were picked by the People's Bank of China to develop pilots to give citizens credit scores, including Alibaba's Ant Financial Services, which operates Sesame Credit.[15][16] However, the Chinese government decided not to award new licenses in 2017, citing concerns over conflicts of interest and unwillingness to share data with rival platforms.[15]

Private companies have also signed contracts with provincial governments to set up the basic infrastructure for the Social Credit System at the provincial level.[17]

The episode Nosedive of the TV series Black Mirror explores some of the negative implications of a system like the Social Credit System, as did the episode "App Development and Condiments" of Community.

See also

References

  1. 1 2 "China rates its own citizens - including online behaviour". www.volkskrant.nl. 25 April 2015. Retrieved 2015-12-26.
  2. ↑ "SAT Boosted the Construction of Credit System and Practiced Reward and Punishment Based on "Two Measures" : Honest Taxpayer on Honor List and Illegal Taxpayers on Blacklist". www.chinatax.gov.cn. General Office of the State Administration of Taxation. July 8, 2014. Retrieved 2015-12-26.
  3. 1 2 "China outlines its first social credit system". news.xinhuanet.com. 2014-06-27. Retrieved 2015-12-26.
  4. ↑ Hatton, Celia (2015-10-26). "China 'social credit': Beijing sets up huge system". BBC News. Retrieved 2017-03-06.
  5. 1 2 Hatton, Celia. "China 'social credit': Beijing sets up huge system". BBC News. Retrieved 2015-12-23.
  6. ↑ Chin, Josh; Wong, Gillian (2016-11-28). "China’s New Tool for Social Control: A Credit Rating for Everything". Wall Street Journal. ISSN 0099-9660. Retrieved 2017-03-06.
  7. ↑ "China’s plan to organize its society relies on ‘big data’ to rate everyone". Washington Post. Retrieved 2017-03-06.
  8. 1 2 3 4 5 6 7 8 9 Meissner, Mirjam (May 24, 2017). "China's Social Credit System: A big-data enabled approach to market regulation with broad implications for doing business in China" (PDF). www.merics.org. Retrieved July 11, 2017.
  9. 1 2 3 4 2015-04-25, 2014-06-14. "Planning Outline for the Construction of a Social Credit System (2014-2020)". chinacopyrightandmedia.wordpress.com. Retrieved 2016-01-08.
  10. ↑ Hsu, Sara (May 10, 2015). "China’s New Social Credit System". The Diplomat. Retrieved 2015-12-26.
  11. ↑ Ahmed, Shazeda (January 24, 2017). ""Cashless Society, Cached Data Security Considerations for a Chinese Social Credit System". www.citizenlab.ca. Retrieved July 13, 2017.
  12. 1 2 3 "国务院关于印发社会信用体系建设 规划纲要（2014—2020年）的通知". www.gov.cn. 2014-06-27. Retrieved 2017-07-14.
  13. ↑ "China Copyright and Media, About". chinacopyrightandmedia.wordpress.com. Retrieved 2016-01-08.
  14. ↑ "Big Brother is watching: how China is compiling computer ratings on all its citizens". South China Morning Post. 2015-11-24. Retrieved 2017-07-14.
  15. 1 2 Hornby, Lucy. "China changes tack on ‘social credit’ scheme plan". Financial Times. 2017-07-05. Retrieved 2017-07-14.
  16. ↑ "人民银行印发《关于做好个人征信业务准备工作的通知》". www.gov.cn. 2015-01-05. Retrieved 2017-07-18.
  17. ↑ "联合信用助力新疆社会信用体系建设". 2016-12-09. Retrieved 2017-07-14.

Further reading

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