Social Credit System

The Social Credit System (Chinese: 社会信用体系; pinyin: shèhuì xìnyòng tǐxì) is a national reputation system being developed by the Chinese Communist Party (CCP), under CCP General Secretary Xi Jinping's administration.[1][2][3] The program initiated regional trials in 2009, before launching a national pilot with eight credit scoring firms in 2014.[4][5] It was first introduced formally by then Chinese Premier, Wen Jiabao, on October 20th, 2011 during one of the State Council Meeting.[6] In 20null, these efforts were centralized under the People's Bank of China with participation from the eight firms.[4] By 20null,[needs update] it is intended to standardize the assessment of citizens' and businesses' economic and social reputation, or 'Social Credit

The social credit initiative calls for the establishments of unified record system for individuals, businesses and the government to be tracked and evaluated for trustworthiness.[Initial reports suggested that the system utilized numerical score as the reward and punishment mechanism;[16][15] recent reports suggest there are in fact multiple, different forms of the social credit system being experimented with. Numerical system has been implemented only in several regional pilot programs, while the nationwide regulatory method has been based primarily on blacklisting and whitelisting.[5][17][19] The credit system is closely related to China's mass surveillance systems such as Skynet,which incorporates facial recognition system, big data analysis technology, AI and Project Maven.

By 20null, some restrictions had been placed on citizens which state-owned media described as the first step toward creating a nationwide social credit system.[] As of November 2019, in addition to dishonest and fraudulent financial behavior, other behavior that some cities have officially listed as negative factors of credit ratings includes playing loud music or eating in rapid transits,[32] violating traffic rules such as jaywalking and red-light violations,[33][34] making reservations at restaurants or hotels but not showing up,[35] failing to correctly sort personal waste,[36][37][38] fraudulently using other people's public transportation ID cards,[39] etc; on the other hand, behavior listed as positive factors of credit ratings includes donating blood, donating to charity, volunteering for community services, and so on

As of June 2019, according to the National Development and Reform Commission of China, 26.82 million air tickets as well as 5.96 million high-speed rail tickets had been denied to people who were deemed "untrustworthy (失信)" (on a blacklist), and 4.37 million "untrustworthy" people had chosen to fulfill their duties required by the law.[43][44] In general, it takes 2–5 years to be removed from the blacklist, but early removal is also possible if the blacklisted person has done enough remedies.[45][46] Certain personal information of the blacklisted people is deliberately made accessible to the society and is displayed online as well as at various public venues such as movie theaters and buses, while some cities have also banned children of "untrustworthy" residents from attending private schools and even universities. On the other hand, people with high credit ratings may receive rewards such as less waiting time at hospitals and governmental agencies, discounts at hotels, greater likelihood of receiving employment offers and so on

Supporters of the Credit System claim that the system helps to regulate social behavior, improve the "trustworthiness" which includes paying taxes and bills on time and promote traditional moral values,[56][57][58] while critics of the system claim that it oversteps the rule of law and infringes the legal rights of residents and organizations, especially the right to reputation, the right to privacy as well as personal dignity, and that the system may be a tool for comprehensive government surveillance and for suppression of dissent from the Communist Party of China

General policies

The social credit system traces its origin from both policing and work management practices,[63] but the concept itself can trace as far back as the Warring States period to Shang Yang's Legalist meritocratic "20-rank" system practised by the Qin state. During the rule of Mao, the work unit was the main intermediate between the individual and the Communist Party of China. The unit concept, as such, is derived from Hegelian and especially behaviorist social science. Other related examples include the neighborhood unit in developments, study of living creatures at the level of a defined ecological unit, the entity concept from accounting, the strategic business unit in commerce, the unit concept of church fellowship in the Wisconsin Evangelical Lutheran Synod, the use of individual behavior as the unit of study in radical behaviorism, and the meme in anthropology.

The government of modern China has maintained systems of paper records on individuals and households such as the dàng'àn (档案) and hùkǒu (户口) systems which officials might refer to, but did not provide the same degree and rapidity of feedback and consequences for Chinese citizens as the integrated electronic system because of the much greater difficulty of aggregating paper records for rapid, robust analysis. [18] The Social Credit System also originated from grid-style social management, a policing strategy first implemented in select locations from 2001 and 2002 (during the rule of paramount leader Jiang Zemin) in specific locations across mainland China. In its first phase, grid-style policing was a system for more effective communication between public security bureaus. Within a few years, the grid system was adapted for use in distributing social services. Grid management provided the authorities not only with greater situational awareness on the group level, but also enhanced the tracking and monitoring of individuals.[63][64] In 20null, sociologist Zhang Lifan explained that Chinese society today is still deficient in trust. People often expect to be cheated or to get in trouble even if they are innocent. He believes that it is due to the Cultural Revolution, where friends and family members were deliberately pitted against each other and millions of Chinese were killed. The stated purpose of the social credit system is to help Chinese people trust each other again

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.[11] It is unclear whether the system will work as envisioned by 20null, but the Chinese government has fast-tracked the implementation of the system, resulting in the publication of numerous policy documents and plans since the main plan was issued in 2013. 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.

Testing the credit sytem

In 2015, the People's Bank of China licensed eight companies to begin a trial of social credit systems.[5][65] Among these eight firms is Sesame Credit (owned by Alibaba Group and operated by Ant Financial), Tencent, as well as China's biggest ride-sharing and online-dating service, Didi Chuxing and Baihe.com, respectively.[66][5] In general, multiple firms collaborated with the government to develop the system of software and algorithms used to calculate credit.[66][67] The Chinese central government originally considered having the Social Credit System be run by a private firm, but by 2017 it has acknowledged the need for third-party administration. In 2017, no licenses to private companies were granted.[5] By mid-2017, the Chinese government had decided that none of the pilots would receive authorization to be official credit reporting measures.[68] The reasons include conflict of interest, the remaining control of the government, as well as the lack of cooperation in data sharing among the firms that participate in the development.[18] However, the Social Credit System's operation by a seemingly external association, such as a formal collaboration between private firms, has not been ruled out yet.[5] In November 2017, Sesame Credit denied that Sesame Credit data was shared with the Chinese government.[69] As of mid 20null, only pilot schemes had been tested.

Private companies have also signed contracts with provincial governments to set up the basic infrastructure for the Social Credit System at the provincial level.[70] As of March 2017, 137 commercial credit reporting companies were active on the Chinese market.[11] 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

Social credit systems

There are multiple social credit systems in China right now. Scholars have conceptualized four different types of systems: the judicial system (blacklist system for discredited individuals and organizations), municipal social credit system, People's Bank of China financial credit system, and commercial credit-rating system.[18] These four systems are not interconnected seamlessly, but relevantly independent from each other with their own jurisdictions, rules, and logic.

In 2013, the Supreme People's Court (SPC) of China started a blacklist of debtors with roughly 32,000 names. The list has since been described as a first step towards a national Social Credit System by state-owned media.[71][72] The SPC also began working with private companies – for example, Sesame Credit began deducting credit points from people who defaulted on court fines.[71] In March 20null, Reuters reported that restrictions on citizens and businesses with low Social Credit ratings, and thus low trustworthiness, would come into effect on May 1.[73][74] By May 20null, several million flight and high-speed train trips had been denied to people who had been blacklisted;[28] as of March 2019, 13 million people were on the list

Financial system

There are also commercial pilots developed by private Chinese conglomerates that have the authorization from the state to test out social credit experiments. [75][62] The algorithms used to assign scores in commercial pilots remain unknown, although sources say some pilots use a big-data analysis and artificial intelligence approach.[67] In 2017, People's Bank of China issued a jointly owned license to Baihang Credit valid for three years.[76] Baihang Credit is co-owned by the National Internet Finance Association (36%) and the eight other companies (8% each), allowing the state to maintain control and oversee the creation of a new commercial pilot.[77] In April 2019, the People's Bank of China announced that a new version of the Personal Credit Report would be put out which allows the ability to collect more personal information. State-run media has described it as "more detailed, more comprehensive and more precisely