China's Social Credit System. Revealing the Dark Sides of Participatory Digital Media

Introduction

In a speech on October 14th in 2018, American Vice President Mike Pence accused China of building “an Orwellian system premised on controlling virtually every facet of human life” (Pence, 2018). These accusations refer to the so-called Chinese Social Credit System (SCS), a radical undertaking of the Chinese Communist Party, making use of technologies such as ubiquitous computing, big data and artificial intelligence combined with participatory digital media, intending to construct a scoring system for its citizens and corporate entities in China (Mengjie, 2014). In the past years, China’s initiative has been heavily criticized by leading Western media outlets and politicians, compared to the Netflix series Black Mirror or Big Brother and described as a sinister future dystopia. The reality, however, is complicated and requires a critical analysis. In a first step, it will be explained what the scoring system exactly is and how it operates, taking the political system and cultural background into consideration. Next, the implications for Chinese people as well as society will be critically assessed, and it will be discussed whether this system is indeed a dystopian vision of mass surveillance or rather an opportunity for a better society.

Neither the idea of rating individuals and companies, nor having specific credit scores is a Chinese phenomenon. The Germans for example are well accustomed to the private credit bureau Schufa Holding AG, which has credit records of more than 66 million German citizens. Other examples in the UK and US include the consumer credit reporting firms Experian, TransUnion and Equifax. Similarly, we encounter social-style scores on a daily basis, anyone who has rented out an apartment on Airbnb, sold a good on Ebay or took a ride with Uber, has ratings on communication, shipping times, payment behavior and many more. We do not visit hotels or restaurants without consulting TripAdvisor or Google for their ratings first, and if the ratings fall too far, it is unlikely people will actually go there. In recent years people have even started to proactively provide car and health insurance companies across the world access to personal and behavioral data in the hope of earning reduced premiums. While these developments provoke extensive debates themselves, it also raises the question what makes the Chinese system different and perhaps even more dangerous.

What is China’s Social Credit System?

In its 13th Five-Year Plan announced in 2014, the Chinese State Council revealed its plans to establish the “Social Credit System” in China by 2020 (Creemers, 2018). The road map intends for a number of separate trial operations in different cities and regions where local governments across the country have their own social record systems. Currently, some selected Chinese companies like the Alibaba spin-off Ant Financial also operate unofficial private credit scoring systems like “Sesame Credit” (Kobie, 2019). As the official documents remain unspecific about the actual composition of the final scoring model in 2020, one has to rely on current pilot projects and assessments of China experts at the current stage to make predictions on the future combined system (Benrath & Bartsch, 2018). Confusingly, the pilots do not all work in the same way and the private systems frequently get conflated with the official system by the media (Kobie, 2019). Nevertheless, the data collected by the private companies like Sesame credit, is expected to be incorporated by the Chinese government and is already used in some pilots says Mareike Ohlberg, a research associate at the Mercator Institute for China Studies (Ohlberg et al., 2017). All this leads to misunderstandings about the SCS and requires careful examination of related news articles and reports.

How does the Social Credit System work?

The plan envisions one nationwide system for 2020 that assigns a unified social credit code or an identity number to all businesses and individuals respectively. In essence, the system will gather information and data on every Chinese citizen and company registered in China from an abundance of sources. These include public organizations, government agencies, state departments and thejudiciary, but most likely also data from private companies such as banks, internet providers and social media corporations. The system will then combine credit evaluations, criminal records, school reports and registration data (Benrath & Bartsch, 2018). Sesame Credit and other private systems, however, gather even more data including shopping preferences, online search keywords and comments in social media. With the help of facial recognition and cameras in the well monitored public space, even movement profiles and traffic offenses are recorded (Benrath & Bartsch, 2018).

So why does the Communist Party set up such a system? Officially, all these measures are designed to build trust and market order in the Chinese economy that is still heavily afflicted by counterfeiting, rampant corruption and fraud (Europol, 2017). Chinese media proclaims that the scoring system will create a “culture of integrity”, solve economic problems and enhance government (Ohlberg et al., 2017). More specifically, the measures are expected to boost market efficiency, increase IP protection, strengthen food and product safety, fight corruption, expand political accountability, and protect private data (Ohlberg et al., 2017).

As a consequence of China’s steep economic rise over the past decades, one can now observe growing socio-economic inequality in China, leading to social tensions. In 2014, the year the SCS started, a total of 90,000 disturbances were reported in China, and this figure has risen since (Kühnreich, 2015). One can thus argue that this system will first and foremost be implemented to enhance control of society, particularly in conflict-ridden regions like Xinjiang.

Understanding the background

China has a millennia-old tradition of state bureaucracy and centralization and now builds on this to deal with said disturbances. Already long before the Leninist organization of the People’s Republic, Confucianismjustified systems of control in China. Examples include the Hukou, a traditional household registration system, and the Danwei, where people were supervised by a social unit which kept political records on each member (Kühnreich, 2015). These control systems influenced political affiliation, job promotions and marriages long after Mao Zedong died. While they lost influence as a consequence of the Chinese policy of reform and opening- up, they gained significance again afterthe 1989 Tiananmen Square protests (Brady, 2010).

On another note, it is important to mention that the current political system in China is a socialist republic run by a single party, the Communist Party of China (CPC). While officially a democracy, this term is construed somewhat different from Western democracies and leads to the fact that the People’s Republic of China is widely considered an authoritarian regime (EIU, 2019). Keeping this political structure in mind, it becomes obvious why measures such as the SCS can be established without protest and headwind. Against this backdrop, it is easy to see why the Chinese internet is strictly regulated and restricted by the ‘Great Firewall’, and why armies of regime-friendly individuals actively influence public debate in favor of the CPC and trawl forums for critical statements (Han, 2015).

What are the consequences for the Chinese people?

With the first local credit systems in place, consequences for Chinese people who have committed “social credit offenses” become evident and provide a glimpse of what the finished system will look like in 2020. A report by the communist party reveals some of the penalties including travel, business and education restrictions (McDonald, 2019). While it still remains mostly unclear which offenses have which consequences, scores were reportedly downgraded for breaking the law, not paying taxes or fines, false advertising, violating drug safety rules and even walking a dog without a leash. Last year alone, would-be travelers were barred 5.5 million times from buying train tickets and even 17.5 million times from buying flight tickets (McDonald, 2019). Moreover, 290,000 citizens were inhibited of taking senior management jobs and 128 individuals were not allowed to leave China due to unpaid taxes (McDonald 2019). Similarly, companies that were blacklisted lost government contracts, were prohibited of importing goods or issuing bonds and lost access to bank loans. The communist party also reported that the credit system has caused more than 3.5 million individuals to “voluntarily fulfill their legal obligations” (McDonald 2019).

Not only do people experience the consequences of low scores and offenses by being prohibited to travel and having restricted access to public services, but they are publicly being blacklisted with their name, photo and ID number. There is however a difference between having a low score and being blacklisted, with the latter only occurring for owing the government money (Kobie, 2019). Interestingly, citizens are strongly encouraged to share their scores openly. For this purpose, Sesame Credit teamed up with the country’s largest dating website, Baihe, where social scores are now displayed prominently on the users’ profiles (Hatton, 2015). This aspect is particularly noteworthy, as the system goes beyond merely punishing individuals, but also creating massive societal pressure, as your friends would immediately know that you ran a red light or did not pay your last phone bill on time. Just as people get punished for misbehavior, positive habits and actions are rewarded with increases in scores. In the city Rongcheng, donating blood, doing charity work, praising the communist party on social media, not having debt or repaying on time, and taking care of elderly will result in point gains (Benrath & Bartsch, 2018). In turn, high scores are then rewarded with priority for school admissions and job applications, easier access to credit, deposit-free car hires, cheaper public transport, tax reductions and even shorter waiting times in the hospital (Benrath & Bartsch, 2018).

Public Perception of the Social Credit System in China

While the public opinion in Western societies on the SCS is mostly negative due to its surveillance-based character, the public perception in China shows a contrary position (Kostka, 2019). A representative study conducted by the Institute of Chinese Studies in Berlin revealed high levels of approval across respondent groups. An astounding 80% of respondents “somewhat” or “strongly” approve the SCS (Kostka, 2019). Interestingly, the study shows that socioeconomically advantaged citizens (wealthy, well-educated and urban residents), along with old people (above 50 years), had the highest approval levels (Kostka, 2019). While one would expect better-educated people to adopt a more critical attitude towards the SCS due to its privacy implications, the anticipated benefits in terms of improved trustworthiness seem to outweigh the concerns. At the same time, these results must be viewed with skepticism. With first credit systems in place, and the study of Kostka (2019) having been conducted through online and mobile applications in China, there is a realistic chance that negative answers would have resulted in score reductions for participants, possibly explaining the dwindling small portion of disapproval among respondents with a mere 1.4%.

Is it the right move for China?

Without doubt, there is a shrinking space in China for religious belief, free speech and investigativejournalism (Albert & Xu, 2017). Thus, the new surveillance capabilities supported by big data and artificial intelligence indeed provide the tools to further curtail these civil rights and should concern us. As aforementioned, there are several reasons to oppose the social credit system, however, the strongly negative press coverage by leading Western media might be a bit too one-sided. China has a proven track record of scandals related to food safety or product quality and is widely known for its heavy pollution (Conolly et al., 2018). There is a good chance that the social credit system will enable the government to better enforce laws and more effectively punish companies posing risks to society, like selling poisoned food or medicine. Millions of people in China today have no trustworthy credit rating as they live outside financial systems, especially in the countryside (Kobie, 2019). Here, the social credit system could provide an alternative means of financial credit and provide access to services and loans that would otherwise be out of reach. Also, it is likely that the new system will amend poor market regulations and reduce bribe practices, ultimately attracting more companies to invest in China (Mortensen, 2018). Lastly, from an individual perspective, having high scores will improve the quality oflife for many Chinese citizens, benefiting from the various perks.

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