14 Dec 2018
Topics China
It is optional for now, but in less than two years’ time, every Chinese citizen will be regulated under a broad social credit system that is the world's first.

The system is already being tested by selected companies and dozens of China's cities. Rongcheng, a city in the Shandong Province, has begun to rate its 740,000 adult residents.

All of them start with a full 1,000 points. A traffic ticket comes with a five-point penalty. On the other hand, heroic acts, donating to charity or volunteering gives one's score a boost.

Based on their score, individuals are allocated a grade ranging from a A+++ to D. High flyers enjoy benefits on rental of public bicycles, better terms for bank loans and discount on heating during winter.

On the other hand, restrictions may be slapped on those with low scores, such as temporary or permanent bans from buying plane or train tickets.

China's State Council says its social credit system hopes to establish and promote a culture of integrity. “Virtue is an internal requirement, and the reward and punishment mechanism is based on trustworthiness and distrust,” it said, in a public notice released in 2014.

Perhaps Dr Christoph Steinhardt, Associate Professor, University of Vienna's Department of East Asian Studies, offers a more realistic definition. “A nationwide system that uses digital technology to collect data from commercial, legal and social spheres, integrates this information in a centralised record and incentive system for trustworthy conduct and thereby seeks to steer individual, corporate and official behaviour.”

Individual, press and business freedoms

It is unclear how China's population of 1.38 billion will be rated when the system is officially implemented in 2020.

There are fears that the system will be used to silence the press. China is already ranked 176 out of 180 countries on the Reporters without Borders 2018 World Press Freedom Index.

Journalist Liu Hu, who has been detained for allegedly spreading falsehoods against the government, looks to be one of the first victims of the social credit system. Liu says he has been barred from buying plane tickets and property, and from sending his child to a private school. “You feel you're being controlled by the list all the time,” he told CBS News.

This control extends beyond the press and what they report. Punishing allegedly bad behaviour forces citizens to act a certain way to avoid penalties. Correct behaviour is determined by the state who are able to push their ideology onto the masses.

“Since the state decides which behaviours are included, how they are used in credit records, and what impact this credit record has on individuals, it is setting enforceable norms on what is “good” and “trustworthy” behaviour according to its ideology,” said Dr Steinhardt.

The system applies to businesses too. Starting from January this year, all companies with a Chinese business licence were allotted an 18-digit social credit code that the government can use to keep tabs on them.

Dr Samantha Hoffman, a non-resident fellow at the Australia Strategic Policy Institute, observed that Chinese authorities have pressured international airlines to use its preferred terminology when referring to Taiwan.

Qantas said it would use the preferred term, “Taiwan China”, on its global websites in line with China's wishes. In May, Japanese retailer Muji was fined 200,000 yuan (US$28,833) for listing Taiwan as a country on its products.

“Companies don’t have a choice but to comply if they want to continue doing business in China,” Dr Hoffman said, in an interview with Guardian Australia.

Big brother is always watching

All across China, there is already a heightened sense of being watched. The country has a network of around 170 million surveillance cameras. Another 400 million are set to be installed in the next three years.

“There’s no privacy and information security these days,” Li Shufu, Chairman of Geely Holding Group and Volvo Cars, said at a forum. “When you walk on the road, there are surveillance cameras everywhere.”

Authorities have also started to use a system that can identify people by their body shapes and how they walk. Developed by Watrix, it can zero in on a person's identity from 50m away.

“You don’t need people’s cooperation for us to be able to recognise their identity,” Huang Yongzhen, the company's CEO, told the Associated Press.

Few Chinese citizens were willing to talk about the downsides of a social credit system.

Perhaps they were heartened by signs that the government was being held accountable too. As of December 2017, over 1,100 government officials have been blacklisted for corruption.

Can the system be trusted?

However, rampant corruption continues to threaten to create deeper social divides in China. Already there have been reports of residents using black data markets to boost their scores so they could be approved for a low-interest loan.

The design of the credit system is often compared to the dang’an system where personal dossiers were controlled by local leaders. The contents of these dossiers could be influenced by “favours” to those in charge. As the credit system is more centralised it is hoped to be less prone to corruption. But this isn't guaranteed.

“The government plans to establish sectorial credit systems and blacklists for different professions. These are often quite tight-knit social systems and I find it not difficult to imagine how personal connections and corruption will enable individuals to get deleted from blacklists, for instance,” said Dr Steinhardt.

There is a fear that people with contacts and resources will be able to rig their credit scores to enjoy the benefits. In a country where corruption is commonplace it's not impossible to see the social credit system increasing the divide between the haves and have-nots.

Furthermore, there doesn't appear to be any official or legal means to reverse a bad score. According to Associate Professor Alfred Wu at the Lee Kuan Yew School of Public Policy, the Chinese system doesn't have the necessary checks and balances to guarantee equal treatment.

“Judging from “traditional” Chinese administrative systems and legacies, the credit scoring system cannot be challenged by individuals. The court system mostly likely cannot revoke the decision made by social credit collectors. Public media would have weak checks on some wrong scoring for some individuals, particularly those disadvantageous,” he said.

Ultimately, Chinese policymakers have to ask: “What are they rewarding?” Is the system actually creating altruistic good behaviour or are people acting based on incentives and fear?

(Photo: Jiří 伊日, cropped from original)
Topics China