In Part 1 of China’s Social Credit System, we covered the basics of the credit system of China. We talked about the weaknesses of the current credit system in China and compared the current credit score system in developed countries like US, Germany, Switzerland and so on.
Next, we identified the 4 principles behind the proposed system and the objectives the system seeks to achieve. We ended with an infographic on the 14 focus areas of the system.
In this 2nd and final part, we talk about how the social credit system of China will be implemented, what are its benefits – from the point of view of the Chinese government – and what are the criticisms leveled against the proposed system.
Implementation of China’s Social Credit System (SCS)
The Social Credit System of China has the goal of establishing the basic structure of a credit system by 2020. That goal wishes to achieve objectives like:
- Raise awareness and level of credibility within the society
- Regulate efficiently the economy without compromising governmental control
- Improve and perfect the socialist market economy
- Make stronger the societal governance program
- Bring innovations in the financial sector with digital governance
- Control and direct the behavior of individuals and businesses
The time-line of the history and implementation of China’s Social Credit System can be roughly represented in the following way:
- 1997: The “Bank Credit Registry and Consulting System” is established.
- 2002: A report delivered by the then President Jiang Zemin calls for establishment of a social credit system.
- 2006: China’s central bank The People’s Bank of China(PBoC) establishes a Credit Reference Center.
- 2007: The State Council sets up an inter-ministerial joint conference for the setting up of the Social Credit System.
- 2010: The Suining county in Jiangsu, China, introduces a mass credit plan that tracks stuff like individual conduct, law abidance, compliance to laws and debt repayment and turns it into a score. Higher the score, better the credit-worthiness.
- 2013: China’s Supreme People’s Court (SPC) comes out with a blacklist of defaulting debtors. The list isn’t small – there are around 32,000 names.
- 2014: A plan with the title “State Council Notice concerning Issuance of the Planning Outline for the Construction of a Social Credit System 2014-2020” is released.
- 2015:, The PBoC plans to licenses to eight private-sector companies to begin trial of the social credit system.
- 2016: An MoU is drafted between various Chinese bodies define roles and exchange information.
- 2017: The plans to hand out licenses to private-sector companies are dropped. The major reason cited is the conflict of interest or the lack of willingness of these companies to share their information with competing companies.
- May 2018: Individuals with poor scores are beginning to get denied air-tickets, high-speed train travel, luxury hotels and similar services and products.
- December 2018: A number of pilot projects are in operation across China but a single integrated system isn’t present – or at least visible.
Technology adaptation in China’s SCS
Exactly what technology will be used – or is already in use – is not clear at this stage. And that is partly understandable: if the authorities were to expose everything, the risk of gamification of the system would increase manifold.
- Credit history: Unlike Europe or the USA, the usage of credit cards in China is modest and also very recent. As a result, people did not have a credit history – at least not very detailed or structured. The SCS is expected to create a detailed, reliable credit history of the people of China.
- Information filter: While governments across the world struggle to gag inconvenient news, China handles it the tough way. Li Hu’s writing and Liang Xiangyi’s eye-roll were not taken lightly. The SCS provides strong insulation against spread of dissent.
- Social order: China’s population is not modest by any standard. Establishing and maintaining consistent social order that is productive for the economy is something the SCS wishes to achieve.
- Tighter control: With the kind of punishment for SCS offenders not many would want to take chances. That helps China build tighter political control.
- Problem solving: The huge and diverse Chinese populace needs all the management and decision making tools avialable. The SCS will provide critical economic inputs and data for a planned growth that China’s communist government holds very close to its heart
- Administrative Efficiency: The SCS is built of digitization and informationalisation. Naturally it will improve administrative efficiency.
- Real time data collection: It is plain as daylight that the SCS will provide unmatched, real time data that can be used for efficient and timely problem solving.
- Integrated ecosystem: The various data collection tools the government deployed till date were at best fragmented. The SCS will provide s single ecosystem to collate all data meaningfully.
- Party Grip: The SCS smartly leverages people’s reliance on social media, travel, going out, luxurious items and so on. Because offenders can’t access these services, they toe the line. The SCS heals a serious problem with an apparently gentle punishment.
- Corruption Discouraging: The system may grow so strong that all public officials would be very scared of being corrupt.
Criticism against the Social Credit System of China
Sources used include: