China's Social Credit System. A powerful tool of Governance or a threat to privacy in the Big Data Era?


Hausarbeit, 2021

17 Seiten, Note: 1,3

Anonym


Leseprobe

Table of Contents

Introduction

Defining Big Data

Use of Big Data

Social Credit System and its implementation

Historical roots

Practice of SCS on individuals

Practice of the Corporate Social Credit System

Purpose behind the SCS

Data-driven Governance

The controversial site of the SCS

Surveillance

Evaluation of morality

Conclusion

References

Introduction

Time means fundamental transformation. Transformation in society, technologies,

economy and transformation in governance. With the rise of globalization and the invention of the Internet, the data generated increased steadily. New technologies such as Big Data have found their application in the most diverse areas. However, nowadays, it is important to integrate these kinds of key technologies into society. The People's Republic of China shows how Big Data and society can be united with each other. With the introduction of the so-called Social Credit System (SCS), the Chinese government is trying to expand the economic use of information technologies immensely, while at the same time enhancing social and political stability. The system, which assesses the credibility of its citizens, firms and organization, is causing a stir in liberal democratic countries. Therefore, this research paper provides a broad understanding of the mechanism of the SCS, as well as the Chinese government's policies and objectives, through the application of information technology. In contrast, it is essential to analyze the controversial aspect of the SCS. It remains questionable to what extent 'China's big vision' will influence society through surveillance and the associated invasion of privacy, and whether it is morally and legally justifiable.

Defining Big Data

Nowadays, the term Big Data plays a major role, in order to handle and deal with complex and rapid-growing amounts of sources of data. This process creates a wide range of analysis and problems (Villars et al., 2011). However, according to the McKinsey Global Institute (2011) Big Data can be defined as “…datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze.” (Manyika et al., 2011). Basically, Big Data can be divided into three fields:

Volume: in Big Data volume depicts the intensified use of new technologies such as social networks, connected machines or smartphones etc. It’s apparent that enormous quantities of data were generated daily, regardless of whether in the professional are or in private routine.

Velocity: the generations process of data and development, as well as the transmission, capture and exchange happens with insanely fast speed.

Variety: the term variety basically describes the different diversity of data, structured and unstructured. In everyday life this can be videos, websites, e-mails, audios, log files, all kind of social networks and even GPS. (Zerhari et al., 2015)

Use of Big Data

Big Data can be used in a wide range of sectors including, crime prevention, health care or even commercial enterprises. In the health care sector Big Data is beneficial for the detection of disease outbreaks. Businesses and commerce retailers also profit from the help of Big Data, because it can help to improve online advertising, as wells as setting new trends. (The Human Rights, Big Data and Technology Project, n.d.) In addition, Big Data contributes above all to time savings and cost reduction. (Research Data Alliance, n.d.) The use of big data has not only changed industries or certain trades, but also politics is taking advantage of it. Back in 2012, for example, Obama relied on big data because it enabled him to generate more voters. (Issenberg, 2012) However, the opposite that Big Data can be immensely abused was shown by the Cambridge Analytica scandal. Basically, big data is used for the evaluation and analysis of all kinds of data. (Lys, 2019) The positive aspects of Big Data are obvious, but in principle its use can be transferred to all areas of life. The People's Republic of China shows how Big Data functions as a perfect tool with the implementation of the social credit system.

Social Credit System and its implementation

One of the biggest showcase projects on how big data and new technologies can be used effectively for government purposes is China with the so-called Social Credit System (SCS). “The China social credit system is a set of databases that keep up-to-date information on the behavior of individuals, corporations, and governmental entities across China.” (Donnelly, 2021) In concrete terms this means that with the SCS, the Chines` government aims to monitor, control and rate behavior of their citizens, businesses, institutes, as wells authorities. Depending on their behavior, they are then rewarded or punished. (Sommer, 2020, p.203). Currently, 47 institutions including the People’s Bank of China or the State Council taking part in the vast Project of the Chines government. (Drinhausen & Brussee, 2021) However, not only local governments or institutions are involved, but also a numerous Chines companies such as the tech companies Tencent and Alibaba. (Kostka, 2018). The establishment of the first phase of the SOC started in 2014, with the aim to be fully established in 2020. (Kühnreich, 2020, p. 210) However, the concept of the SCO took place much earlier.

Historical roots

In order to understand the progress of the Social Credit System it’s necessary to have a closer look at the late stages of the nineties. Under the direction of Lin Junyue, the planning and research of the SCS was started already in 1999. (Raphaël & Xi, 2019) The weak legal systems, damage of culture revolution and high levels of corruption, led to a significant loss of trust between the people and the government, which was already tarnished. China increasingly established itself as a player in the global economy, however, the lack of confidence and questions about credit, accountability and corporate debt affected the state. Due to these issues, the political decisions-maker were convinced that the growth of the socialist market economy would be inhibited. (Schaefer & Yin, 2019) After the economic sentiment gradually subsided and conditions improved, the Chines government, wanted to draw their citizens` attention to the financial credit rating system. The Chines Communist Party pulled out all the stops to provide sufficient capital available for lending, investing and other economic activities among the people, in order to stimulate economic growth. However, the grant of credits to the population, meant in reverse that creditors had to calculate the creditworthiness of their capital borrowers. (Knight, 2021, p. 237, as cited in Lin, 2003) Lin Junyue proposed to set up a financial credit system, according to the Western role model, but adapted according to the specifications of the Chines state. In other terms, a system that rates behavior, whether of individuals or companies, through the collection of large data sets and depending on the behavior, the systems includes rewards or punishments (Schaefer & Yin, 2019, p. 8) Already in 2009, the first pilot projects started on regional level and in 2014 the People`s Republic of China announced that SCS will be extended to the entire country by 2020.(Donnelly, 2021)

Practice of SCS on individuals

In principle, the exercise of the SCS is initially carried out with the collection of data, which once again underlines the term Big Data. The Chinese government gathers an infinite amount of data. The majority of this data is already in possession of the government. Such datasets are collected from third parties or from the financial criminal law. In addition, state institutions such as the People’s Bank of China act as a support organ in the collection of data. (Lee, 2020) Furthermore, public video surveillance and facial recognition software are a big part of the execution of SCS. (Bartsch & Gottske, 2018) The data collection is the indispensable basis for assessing and scoring people’s behavior. Specifically, that means that citizens who have high credit scores are considered to be trustworthy and therefore they are able to enjoy certain privileges in the society. Privileges are, for instance, booking a hotel room or a car without having to make an advance payment. (Ahmed, 2017) Other rewards also include shorter waiting times in hospital, tax reduction or even a priority for allocation of schools and jobs. (Bartsch & Gottske, 2018). However, those who are not adapt to the rules, they must expect consequences. According to reports, the government distinguish between losing scores or get an entry on the blacklist, whereby the principle of the blacklist is part of the official ranking system (Kobie, 2019) People are blacklisted who not adhere to the social norms, such as inappropriate behavior on public transport or tax fraud. (Scheafer & Yin, 2019, p. 14) Therefore, it’s common to be deprived of the right to buy a plane or train ticket. Thus, in 2019, 17.5 million times no ticket purchase could be made, due to offences. (McDonald, 2019) In order to slip off the credit score, it is often enough to behave in a supposedly inappropriate way, such as expressing one’s opinion against the government on social media or if one does not pay regular visits to older family members. (Bartsch & Gottske, 2018) One of the consequences is therefore public humiliation. Peking has implemented a digital public pillory as a warning to others. The identity of a citizen is shown on public screens, for instance, because they have disregarded a red traffic light. (Petring & Mai, 2018) The Chinese city of Rongcheng is now a prime example of how the SCS could be successfully established in society. Each citizen starts the ranking with 1000 points. If the ranking exceeds the 1050 points, citizen receives the classification Triple A, which confirms the highest status of integrity. If the point score is less than 600, then the classification is made in category D. The government deemed the citizen untrustworthy, as a result, blacklisting takes place and surveillance reaches new levels. (Strittmatter, 2020, p. 278)

Practice of the Corporate Social Credit System

It’s not only society that is valued as an individual, but also companies play a major role in the Social Credit System. However, not only companies at the national level are rated, but also international companies with operations in the Chinese market become part of the system. (Gnädiger, 2019) “The Corporate SCS uses modern technologies to monitor, control and steer market participants. It comprises a diverse range of rating requirements, which form the basis for calculating regulatory ratings awarded to all market actors.” (European Chamber, 2019) The Chines state check whether the legal requirements are being met. This includes, inter alia, compliance with quality requirements, environmental regulations, licenses, as well as tax payment. (Stewens & Rose, 2020, p.282) Just as with the SCS, the CSCS also includes punishment measures for insufficient behaviors. Therefore, it’s common for companies with low score to receive certain penalties. Companies must expect to be subject to inspections by supervisory authorities. (Koty, 2019) Further sanctions range from poorer credit conditions to bans on leaving the country. In severe cases, a sanction can be enforced by excluding the company from the market. How long a company remains on the blacklist depend on the severity of the misconduct. Depending on the cases, the duration can be from six months to three years. (Solbach, 2020, p. 559) The so-called redlist contains the companies that the state deemed trustworthy, or, rather, the companies have fulfilled the government’s requirements in an expectational manner, such as a strong liquidity, innovative strength or production with environmentally friendly resources. (Schaefer & Yin, 2019, p. 16) The reward mechanism offers companies with an excellent ranking lower tax rates or more favorable credit terms. (Solbach, 2020, p. 559) Furthermore, it’s important to distinguish between the Corporate Social Credit and the Sesam Credit System, because “the private systems, including Ant Financial's Sesame Credit, often get conflated with the government plans, though they aren't part of the official system.” (Kobie, 2019) The Sesam Credit is a private credit system operated by the Chinese e-commerce company Alibaba. Basically, the online behavior of consumer is analyzed and evaluated. (Brühl, 2019) For instance, customer receive discounts on air travel if they buy only organic products, because their behavior is classified as health conscious. (Lee, 2018)

Purpose behind the SCS

The People’s Republic of China introduced the social credit system for many reasons. According to the paper from 2014, the State Council justified his intentions with the following words:

“… a credit services system, its inherent requirements are establishing the idea of an sincerity culture, and carrying forward sincerity and traditional virtues, it uses encouragement to keep trust and constraints against breaking trust as incentive mechanisms, and its objective is raising the honest mentality and credit levels of the entire society.” (Creemer, 2014)

In short, it reflects the mechanism of trust is good, but breaking it is bad. After the Chinese politician Xi Jinping took office as the head of the Communist Party in 2013, the SCS project was accelerated. At this time, the sentiment of the Communist Party was at a low point. The party was threatened with a split, which could have undermined the power of the Chines government. (Strittmatter, 2020)

In addition, there were long-time problems ranging from corruption, fraud to the assessment of creditworthiness, which in turn hampered economic growth. (Ohlberg, et al., 2017,) In order, to restore fairness in society, the original idea was to introduce a kind of arbitrator. However, the Communist Party rejected this and the national expansion of the SCS was foreseeable. (Strittmatter, 2020, p. 273) The Chines` government considered the SCS as a tool for effective problem-solving. Basically, the creation of the SCS and its purpose is built on two pillars: social trust and strengthening economic growth. (Shen, 2019) In view of these developments, the People’s Republic of China under the leadership of Xi Jinping, is primarily achieving a super-class economic boom with the help of the Social Credit System. Nevertheless, it’s more importantly, the system “…mixes economic criteria with non-economic behavioral criteria to evaluate individuals, companies, and other organizations.” (Ohlberg et al., 2017, p.6) in order, to reshape honesty and integrity in Chinese society.

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Details

Titel
China's Social Credit System. A powerful tool of Governance or a threat to privacy in the Big Data Era?
Hochschule
Technische Hochschule Ingolstadt
Note
1,3
Jahr
2021
Seiten
17
Katalognummer
V1183364
ISBN (Buch)
9783346612007
Sprache
Deutsch
Schlagworte
China, Social Credit System, Democracy, Big Data
Arbeit zitieren
Anonym, 2021, China's Social Credit System. A powerful tool of Governance or a threat to privacy in the Big Data Era?, München, GRIN Verlag, https://www.grin.com/document/1183364

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