In recent months, China’s social credit system (SCS) has been hitting the headlines. The SCS is often described as a unified project that constantly and automatically monitors and scores the behaviour of citizens, in order to sanction or reward them. But, so far, that description is incorrect. The SCS as it stands today is best understood as a bunch of different initiatives sharing a similar fundamental concept, but with different objectives and involving various public and private entities.


On the governmental side, work towards creating the SCS started around the turn of the century. As China increasingly became a market economy, the leadership grew more and more concerned about improper conduct in the marketplace. Abuses such as the sale of unsafe, counterfeit or substandard goods, and non-payment of debts or fines, caused considerable concern among market authorities. In response, they took initial measures to study the creation of a system that would use reputational sanctions and rewards to ensure trust in the economy. By 2014, both the scope and impact of the envisaged social credit system had grown enormously to include political discipline and cover benefit fraud by citizens.

The main operational side of this part of the SCS is a series of blacklists. The most important one is maintained by the Supreme People’s Court, and lists individuals and businesses who have not complied with a court judgment against them. Aside from being publically named and shamed, blacklisted individuals and businesses are also hit with various sanctions, ranging from not being eligible for particular corporate offices and government loans to limits on air travel and star-rated hotels. And ministries have created more specifically targeted blacklists, from workplace safety to environmental protection. Civil aviation authorities, for instance, now blacklist individuals misbehaving on aircraft, barring them from future flights. To further complicate matters, local authorities also have blacklist systems of their own, addressing matters falling under their jurisdiction. These vary considerably from place to place. In Shenzhen, for instance, facial recognition cameras log anyone crossing the road when the traffic lights are green for vehicles. Those caught five times end up on the blacklist. In short, the blacklist system is binary: you’re either on one or you’re not.

Ranging from not being eligible for corporate offices and loans to limits on air travel and star-rated hotels

But the technology is still being developed. National identity databases for individuals and businesses are in the pipeline, but don’t currently exist. This means that as Chinese society grows increasingly mobile, it has been difficult to track alleged offenders across regional borders, but also to transmit healthcare information from one locality to another. Quantitative scores are currently not used at the national level, although some localities have experimented with them. Rongcheng, a small city in the eastern province of Shandong, for instance, categorises its citizens from AAA to D, influencing whether they will be eligible for government jobs or subsidies.

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A rather different kind of social credit system emerged from China’s rapidly expanding online economy. For years, China’s central bank had tried to expand private credit opportunities, yet China’s traditional banking sector remained mostly focused on financially supporting government policies, while the Chinese economy remained largely cash-based. Only a few held credit cards. So, China’s burgeoning internet companies had to create mobile payment systems to support their business.

Subsequently, the central bank launched a trial scheme in which eight private businesses, including financial subsidiaries of online giants Alibaba and Tencent, were allowed to develop credit scoring mechanisms. Alibaba’s programme, Sesame Credit, became the best known of these experiments. Combining elements of a rating scheme and a loyalty programme, it issued a score between 350 and 950 to users. While a low score didn’t result in punishment, a high score came with rewards ranging from visas being processed to easier access to loans. Many users also published their Sesame scores on their public profile or even in Alibaba’s online dating service.

Sesame credit shouldn’t be confused with the official government credit system. In fact, concerns about partiality and conflicts of interest led the central bank to refuse permanent licences to all eight businesses. Instead, the eight jointly established a credit rating company in collaboration with an intermediary organisation with the backing of the central bank.

Yet, at the same time, the focus on moral conduct in both the government and private credit systems does reflect a form of paternalism, strongly present in current Chinese political culture. High-level policy documents indicate the leadership is convinced that increasing datafication will help it to influence citizen behaviour, which could resolve its issues with regulating society and the economy. It remains to be seen whether that actually happens.



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