Social Credit System
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The Social Credit System ( zh , c = 社会信用体系 , p = shèhuì xìnyòng tǐxì ) is a national
credit rating A credit rating is an evaluation of the credit risk of a prospective debtor (an individual, a business, company or a government). It is the practice of predicting or forecasting the ability of a supposed debtor to pay back the debt or default. The ...
and
blacklist Blacklisting is the action of a group or authority compiling a blacklist of people, countries or other entities to be avoided or distrusted as being deemed unacceptable to those making the list; if people are on a blacklist, then they are considere ...
implemented by the
government of the People's Republic of China The government of the People's Republic of China is based on a system of people's congress within the parameters of a Unitary state, unitary communist state, in which the ruling Chinese Communist Party (CCP) enacts its policies through people's ...
. The social credit system is a record system so that businesses, individuals, and government institutions can be tracked and evaluated for trustworthiness. The national regulatory method is based on varying degrees of
whitelisting A whitelist or allowlist is a list or register of entities that are being provided a particular privilege, service, mobility, access or recognition. Entities on the list will be accepted, approved and/or recognized. Whitelisting is the reverse of ...
(termed redlisting in China) and blacklisting. There has been a widespread misconception that China operates a nationwide and unitary social credit "score" based on individuals' behavior, leading to punishments if the score is too low. Media reports in the West have sometimes exaggerated or inaccurately described this concept. In 2019, the central government voiced dissatisfaction with pilot cities experimenting with social credit scores. It issued guidelines clarifying that citizens could not be punished for having low scores and that punishments should only be limited to legally defined crimes and civil infractions. As a result, pilot cities either discontinued their point-based systems or restricted them to voluntary participation with no major consequences for having low scores. According to a February 2022 report by the Mercator Institute for China Studies (MERICS), a social credit "score" is a myth as there is "no score that dictates citizen's place in society". The origin of the concept can be traced back to the 1980s when the Chinese government attempted to develop a personal banking and financial credit rating system, especially for rural individuals and small businesses who lacked documented records. The program first emerged in the early 2000s, inspired by the
credit scoring A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced from credit bur ...
systems in other countries. The program initiated regional trials in 2009, before launching a national pilot with eight credit scoring firms in 2014.Hornby, Lucy. The Social Credit System is an extension to the existing legal and financial credit rating system in China. Managed by the
National Development and Reform Commission The National Development and Reform Commission (NDRC) is the third-ranked executive department of the State Council of the People's Republic of China, which functions as a macroeconomic management agency. Established as the State Planning C ...
(NDRC), the
People's Bank of China The People's Bank of China (officially PBC and unofficially PBOC) is the central bank of the People's Republic of China. It is responsible for carrying out monetary policy as determined by the ''PRC People's Bank Law'' and the ''PRC Commercia ...
(PBOC) and the
Supreme People's Court The Supreme People's Court of the People's Republic of China (SPC) is the highest court of the People's Republic of China. It hears appeals of cases from the high people's courts and is the trial court for cases about matters of national ...
(SPC), the system was intended to standardize the credit rating function and perform financial and social assessment for businesses, government institutions, individuals and non-government organizations. The Chinese government's stated aim is to enhance trust in society with the system and regulate businesses in areas such as
food safety Food safety (or food hygiene) is used as a scientific method/discipline describing handling, food processing, preparation, and food storage, storage of food in ways that prevent foodborne illness. The occurrence of two or more cases of a simi ...
,
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
, and
financial fraud In law, fraud is intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover mone ...
. By 2023, most private social credit initiatives had been shut down by the PBOC.


History


Background

The origin of the Social Credit System can be traced back to the early 1990s as part of attempts to develop personal banking and financial credit rating systems in China, and was inspired by Western commercial credit systems like
FICO FICO (legal name: Fair Isaac Corporation), originally Fair, Isaac and Company, is an American data analytics company based in Bozeman, Montana, focused on credit scoring services. It was founded by Bill Fair and Earl Isaac in 1956. Its FIC ...
,
Equifax Equifax Inc. is an American multinational consumer credit reporting agency headquartered in Atlanta, Atlanta, Georgia and is one of the three largest consumer credit reporting agency, consumer credit reporting agencies, along with Experian and T ...
, and
TransUnion TransUnion LLC is an American consumer credit reporting agency. TransUnion collects and aggregates information on over one billion individual consumers in over thirty countries including "200 million files profiling nearly every credit-active co ...
. The credit system aims to facilitate financial assessment in rural areas, where individuals and small business entities often lacked financial documents. In 1999, businesswoman Huang Wenyun wrote a report following her negative experiences with domestic business trustworthiness and her research into credit management in the United States business environment. At the time, credit management and rating were largely unfamiliar concepts within the Chinese economy. Huang sent her report to Premier
Zhu Rongji Zhu Rongji ( zh, s=朱镕基; IPA: ; born 23 October 1928) is a retired Chinese politician who served as the 5th premier of China from 1998 to 2003. He also served as member of the Politburo Standing Committee of the Chinese Communist Party (CCP ...
, who approved it and in August 1999 ordered the People's Bank of China to take immediate action. In September 1999, the Institute of Economics of the
Chinese Academy of Social Sciences The Chinese Academy of Social Sciences (CASS) is a Chinese state research institute and think tank. It is a ministry-level institution under the State Council of the People's Republic of China. The CASS is the highest academic institution and c ...
began a research project on establishing a national credit management system. Huang contributed more than RMB 300,000 to fund the research initiative and sponsored fieldwork in the United States and Europe. In the United States, the research group studied and prepared translations of 17 American credit reporting laws, including the
Fair Credit Reporting Act The Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 ''et seq.'', is federal legislation enacted to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. It was intended ...
. In January 2000, the research group from the Chinese Academy of Social Sciences compiled their research into a text titled ''National Credit Management System''. Among these academics was Lin Junyue, who became an important intellectual figure in the development of social credit. Premier Zhu approved the text and instructed government figures from ten ministries and commissions to begin studying the creation of a social credit management system. In late January 2000, the State Council released an essay by Zhu in which Zhu stated that China must "vigorously rectify social credit." In March 2000, Zhu delivered the government's work report to the
National People's Congress The National People's Congress (NPC) is the highest organ of state power of the People's Republic of China (PRC). The NPC is the only branch of government in China, and per the principle of unified power, all state organs from the Sta ...
, in which Zhu talked about the need to rectify social credit in the context of supervision of financial institutions, fraud, tax evasion, and debt repayments.


2002 to 2014

In 2002, the construction of a social credit system was formally announced during the
16th National Congress of the Chinese Communist Party The 16th National Congress of the Chinese Communist Party was held in Beijing between November 8 and 14, 2002. It was preceded by the 15th National Congress and was succeeded by the 17th National Congress. 2,114 delegates and 40 specially in ...
. The central government had not developed a specific vision for what a finished system might look like. Local governments were to develop pilot initiatives which could then guide the larger policy approach. In 2003, the State Council stated that the basic framework and operational mechanisms for a social credit should be established within five years. Most of the goals in this period were missed, although the financial aspects of social credit developed much further than non-financial aspects. Among the financial aspects of social credit which developed quickly was credit reporting. In March 2006, the People's Bank of China established the Credit Reference Center, which has information regarding financial credit worthiness and has established basic financial records for 990 million Chinese citizens as of 2019. Its records relate only to finance and does not have any blacklist mechanism. In 2007, the Inter-Ministerial Joint Conference on the Establishment of the SCS was established, replacing the leading small group which had previously been the top policy organ for social credit issues. The initial blueprints of the Social Credit System were drafted in 2007 by government bodies. The social credit system also attempts to solve the moral vacuum problem, insufficient market supervision and income inequality generated by the rapid economic and social changes since
Chinese economic reform Reform and opening-up ( zh, s=改革开放, p=Gǎigé kāifàng), also known as the Chinese economic reform or Chinese economic miracle, refers to a variety of economic reforms termed socialism with Chinese characteristics and socialist marke ...
in 1978. As a result of these problems, trust issues emerged in Chinese society such as food safety scandals, labor law violations, intellectual property thefts and corruption. Among the purposes of social credit is promotion and moral education regarding personal integrity and honesty. The policy of the social credit system traces its origin from both policing and work management practices. The government of modern China has maintained systems of paper records on individuals and households such as the ''dàng'àn'' ( zh , s = 档案 , labels=no) and ''hùkǒu'' ( zh , s = 户口 , labels=no) which officials might refer to, but these systems do not provide the same degree and rapidity of feedback and consequences for Chinese citizens as the integrated electronic system because of the much greater difficulty of aggregating paper records for rapid, robust analysis. The Social Credit System also originated from grid-style social management, a policing strategy first implemented in select locations from 2001 and 2002 (during the administration of
Chinese Communist Party The Communist Party of China (CPC), also translated into English as Chinese Communist Party (CCP), is the founding and One-party state, sole ruling party of the People's Republic of China (PRC). Founded in 1921, the CCP emerged victorious in the ...
General Secretary Secretary is a title often used in organizations to indicate a person having a certain amount of authority, Power (social and political), power, or importance in the organization. Secretaries announce important events and communicate to the org ...
Jiang Zemin Jiang Zemin (17 August 1926 – 30 November 2022) was a Chinese politician who served as General Secretary of the Chinese Communist Party, general secretary of the Chinese Communist Party (CCP) from 1989 to 2002, as Chairman of the Central Mil ...
) in specific locations across
mainland China "Mainland China", also referred to as "the Chinese mainland", is a Geopolitics, geopolitical term defined as the territory under direct administration of the People's Republic of China (PRC) in the aftermath of the Chinese Civil War. In addit ...
. In 2002, the Jiang administration proposed a social credit system as part of the promotion of a "unified, open, competitive, and orderly modern market system." In its first phase, grid-style policing was a system for more effective communication between public security bureaus. Within a few years, the grid system was adapted for use in distributing social services. Grid management provided the authorities not only with greater situational awareness on the group level, but also enhanced the tracking and monitoring of individuals. In 2018, sociologist Zhang Lifan explained that Chinese society today is still deficient in trust. People often expect to be cheated or to get in trouble even if they are innocent. He believes that it is due to the
Cultural Revolution The Cultural Revolution, formally known as the Great Proletarian Cultural Revolution, was a Social movement, sociopolitical movement in the China, People's Republic of China (PRC). It was launched by Mao Zedong in 1966 and lasted until his de ...
, where friends and family members were deliberately pitted against each other and millions of Chinese were killed. The stated purpose of the social credit system is to help Chinese people trust each other again. One focus of social credit is to build judicial credibility through more effective enforcement of court orders. In 2013, the
Supreme People's Court The Supreme People's Court of the People's Republic of China (SPC) is the highest court of the People's Republic of China. It hears appeals of cases from the high people's courts and is the trial court for cases about matters of national ...
(SPC) of China started a
blacklist Blacklisting is the action of a group or authority compiling a blacklist of people, countries or other entities to be avoided or distrusted as being deemed unacceptable to those making the list; if people are on a blacklist, then they are considere ...
of
debtor A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...
s with roughly 32,000 names. The list has since been described as a first step towards a national Social Credit System by state-owned media. The SPC's blacklist is composed of Chinese citizens and companies that refuse to comply with court orders (typically court orders to pay a fine or to repay a loan) despite having the ability to do so. It is hosted online at the Supreme People's Court judgment defaulter blacklist portal, and the information is shared with Credit China and the National Enterprise Credit Information Publicity System. The SPC also began working with private companies. For example, Sesame Credit began deducting credit points from people who defaulted on court fines. Although there was institutional enthusiasm for a social credit system during the 2004 to 2014 period, implementation was adversely impacted by planning difficulties stemming from the relationship between credit reporting initiatives (which were defined narrowly) and regulatory objectives (which were more vaguely defined). A lack of central coordination resulted in institutional bottlenecks.


2014 to 2020

The State Council sought to accelerate the development of social credit and, in 2014, issued the ''Planning Outline for the Construction of a Social Credit System (2014-2020)''. The ''Planning Outline'' was a major step in China's approach to developing a social credit system; before the 2014 ''Planning Outline'', there had been only one high-level policy document (issued in 2007). Since the ''Planning Outline,'' the State Council has issued new guidance annually. The ''Planning Outline'' focused primarily on economic activity in commerce, government affairs, social integrity, and judicial credibility. It set broad goals intended to be reached by 2020: #a reward and punishment mechanism should be fully effective, #a basic credit investigation that covers the whole of society should be established, #credit oversight mechanisms should be established, #credit service markets should be performing well, and #fundamental social credit laws, regulations, and standards should be established. In 2015, the People's Bank of China licensed eight companies to begin a trial of social credit systems. Among these eight firms is
Sesame Credit Zhima Credit (; also known as Sesame Credit) is a private company-run credit scoring and loyalty program system developed by Ant Group, an affiliate of Alibaba Group. It uses data from Alibaba's services to compile its score. Customers receive a ...
(owned by
Alibaba Group Alibaba Group Holding Limited, branded as Alibaba (), is a Chinese Multinational corporation, multinational technology company specializing in E-commerce in China, e-commerce, retail, Internet, and technology. Founded on 28 June 1999 in Hangzho ...
and operated by
Ant Financial Ant Group ( zh, s=蚂蚁集团, p=Mǎyǐ jítuán, t=), formerly known as Ant Financial, is an affiliate company of the Chinese conglomerate Alibaba Group. The group owns the world's largest mobile (digital) payment platform Alipay, which serves ...
),
Tencent Tencent Holdings Ltd. ( zh, s=腾讯, p=Téngxùn) is a Chinese Multinational corporation, multinational technology Conglomerate (company), conglomerate and holding company headquartered in Shenzhen. It is one of the highest grossing multimed ...
, and China's biggest ride-sharing and online-dating services, Didi Chuxing and Baihe.com, respectively. In general, multiple firms collaborated with the government to develop the software and algorithms used to calculate credit. Commercial pilot programs developed by private Chinese conglomerates that have the authorization from the state to test out social credit experiments. The pilots are more widespread than their local government counterparts but function on a voluntary basis: citizens can decide to opt-out of these systems at any time on request. Users with good scores are offered advantages such as easier access to credit loans, discounts for car and bike sharing services, fast-tracked visa applications, free health check-ups and preferential treatment at hospitals. In 2016, the State Council encouraged market entities to provide preferential treatment to those with outstanding financial credit records and differentiated services to those with seriously untrustworthy records. The Chinese central government originally considered having the Social Credit System be run by a private firm, but by 2017, it acknowledged the need for third-party administration. However, no licenses to private companies were granted. By mid-2017, the Chinese government had decided that none of the pilot programs would receive authorization to be official credit reporting systems. The reasons include
conflict of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple wikt:interest#Noun, interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates t ...
, the remaining control of the government, as well as the lack of cooperation in data sharing among the firms that participate in the development. However, the Social Credit System's operation by a seemingly external association, such as a formal collaboration between private firms, has not been ruled out yet. In November 2017, Sesame Credit denied that Sesame Credit data was shared with the Chinese government. In 2017, the People's Bank of China issued a jointly owned license to Baihang Credit valid for three years. Baihang Credit is co-owned by the National Internet Finance Association (36%) and the eight other companies (8% each), allowing the state to maintain control and oversee the creation of new commercial pilot programs. As of mid-2018, only pilot schemes had been tested without any official implementation. Private companies have also signed contracts with provincial governments to set up the basic infrastructure for the Social Credit System at the provincial level. As of March 2017, 137 commercial credit reporting companies were active on the Chinese market. As part of the development of the Social Credit System, the Chinese government has been monitoring the progress of third-party Chinese credit rating systems. Ultimately, Chinese government dropped the support for privately developed credit rating system, and these pilot projects remained as corporate
loyalty program A loyalty program or rewards program is a marketing strategy designed to encourage customers to continue to shop at or use the services of one or more businesses associated with the program. Single-company vs. coalition programs Loyalty progr ...
s. In December 2017 the
National Development and Reform Commission The National Development and Reform Commission (NDRC) is the third-ranked executive department of the State Council of the People's Republic of China, which functions as a macroeconomic management agency. Established as the State Planning C ...
and People's Bank of China selected "model cities" that demonstrated the steps needed to make a functional and efficient implementation of the Social Credit System. Among them are:
Hangzhou Hangzhou, , Standard Mandarin pronunciation: ; formerly romanized as Hangchow is a sub-provincial city in East China and the capital of Zhejiang province. With a population of 13 million, the municipality comprises ten districts, two counti ...
,
Nanjing Nanjing or Nanking is the capital of Jiangsu, a province in East China. The city, which is located in the southwestern corner of the province, has 11 districts, an administrative area of , and a population of 9,423,400. Situated in the Yang ...
,
Xiamen Xiamen,), also known as Amoy ( ; from the Zhangzhou Hokkien pronunciation, zh, c=, s=, t=, p=, poj=Ē͘-mûi, historically romanized as Amoy, is a sub-provincial city in southeastern Fujian, People's Republic of China, beside the Taiwan Stra ...
,
Chengdu Chengdu; Sichuanese dialects, Sichuanese pronunciation: , Standard Chinese pronunciation: ; Chinese postal romanization, previously Romanization of Chinese, romanized as Chengtu. is the capital city of the Chinese province of Sichuan. With a ...
,
Suzhou Suzhou is a major prefecture-level city in southern Jiangsu province, China. As part of the Yangtze Delta megalopolis, it is a major economic center and focal point of trade and commerce. Founded in 514 BC, Suzhou rapidly grew in size by the ...
, Suqian,
Huizhou Huizhou ( zh, c= ) is a city in east-central Guangdong Province, China, forty-three miles north of Hong Kong. Huizhou borders the provincial capital of Guangzhou to the west, Shenzhen and Dongguan to the southwest, Shaoguan to the north, Hey ...
,
Wenzhou Wenzhou; Chinese postal romanization, historically known as Wenchow is a prefecture-level city in China's Zhejiang province. Wenzhou is located at the extreme southeast of Zhejiang, bordering Lishui, Zhejiang, Lishui to the west, Taizhou, Zheji ...
,
Weihai Weihai ( zh, t=, p=Wēihǎi), formerly Weihaiwei ( zh, s=, p=Wēihǎiwèi, l=Mighty Sea Fort, first=t), is a prefecture-level city and major seaport city in the easternmost Shandong province of China. It borders Yantai to the west and the Yellow ...
,
Weifang Weifang ( zh, s=潍坊, t=濰坊, p=Wéifāng) is a prefecture-level city in central Shandong province, People's Republic of China. The city borders Dongying to the northwest, Zibo to the west, Linyi to the southwest, Rizhao to the south, Qingdao ...
, Yiwu and Rongcheng. These pilots were deemed successful in their handling of "blacklists and 'redlists'", their creation of "credit sharing platforms" and their "data sharing efforts with the other cities". By 2018, some restrictions had been placed on citizens which state-owned media described as the first step toward creating a nationwide social credit system. According to Antonia Hmaidi of the Mercator Institute for China Studies (MERICS), the local government Social Credit System experiments are focused more on the construction of transparent rule-based systems, in contrast with the rating systems used in the commercial pilots. Citizens often begin with an initial score, to which points are added or deducted depending on their actions. The specific number of points for each action are often listed in publicly available catalogs. Cities also experimented with a multi-level system, in which districts decide on scorekeepers who are responsible for reporting scores to higher-ups. Some experiments also allowed citizens to appeal the scores they were attributed. In 2019, the central government expressed "unhappiness" at the pilot cities that were experimenting with social credit scores and issued guidelines that no citizens can be punished for having low scores, and instead punishment can only be for legally defined crimes and civil infractions, consequently leading to pilot cities either changing their programs to be encouragement-only or not materializing at all. In July 2019, an NDRC spokesperson stated that at a press conference that "personal credit scores can be combined with incentives for trustworthiness, but cannot be used for punishments". The
Hong Kong Government The Government of the Hong Kong Special Administrative Region (commonly known as the Hong Kong Government or HKSAR Government) is the Executive (government), executive authorities of Hong Kong. It was established on 1 July 1997, following the ...
stated in July 2019 that claims that the social credit system will be rolled out in Hong Kong are "totally unfounded" and stated that the system will not be implemented there. In 2019, high-level NDRC officials stated that over 10% of people blacklisted for their commission of tax fraud had repaid their taxes, that the bad credit rate had decreased by 22.7%, and that the proportion of companies blacklisted had decreased. In the view of these officials, these were "remarkable results."


2020 to present

In 2020, the Supreme People's Court announced that a nationwide total of 7.51 million blacklisted judgment defaulters had fulfilled their legal obligations and been removed from the judgment defaulter blacklist, accounting for half of the blacklisted judgment defaulters as of that date. As a result of the
COVID-19 pandemic The COVID-19 pandemic (also known as the coronavirus pandemic and COVID pandemic), caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), began with an disease outbreak, outbreak of COVID-19 in Wuhan, China, in December ...
, various aspects of social credit were modified. On February 1, 2020, the People's Bank of China announced it would temporarily suspend the inclusion of mortgage and credit card payments in the credit record of people impacted by the pandemic. Private financial credit scoring companies, including Sesame Credit, suspended financial credit ratings. Various cities established mechanisms to incentivize companies to provide pandemic relief, with measures including redlisting for those donating funds and supplies with benefits like simplified administrative procedures, increased policy support, or increased financial support. On the enforcement side of social credit, provinces and cities promulgated regulations emphasizing heavy penalties for price hikes, violence against doctors, counterfeit medical supplies, refusal to comply with pandemic prevention measures, and wildlife trade violations. In 2020, the rights protection metrics in the NDRC's ''City Credit Status Monitoring and Early Warning Indicators'' emphasized that cities must establish transparent credit repair procedures handled within an appropriate timeframe. It also emphasized that cities should prevent the over generalization of the concept of credit, stating that individual behavior such as petitioning the government, unpaid property fees, running red lights (among other listed examples) must not be included in a person's credit record. The State Council issued its ''Guiding Opinions on Further Improving Systems for Restraining the Untrustworthy and Building Mechanisms for Building Credit Worthiness that have Long-term Effect'' in November 2020. The central message of the ''Guiding Opinions'' was that new blacklists should not be created on an ''ad hoc'' basis and that social credit should not be applied in policy areas without sufficient consensus. It stated that credit repair processes must be improved, that blacklists must only be used in instances of severe harm, and that information security and privacy should be prioritized. In November 2021, the United Nations Education, Scientific, and Cultural Organization (UNESCO) adopted a ''Recommendation on the Ethics of AI''. Among its recommendations is that "AI systems should not be used for social scoring or mass surveillance purposes." China is a signatory of the document. Following their submission for public comment, China in December 2021 issued the ''National List of Basic Penalty Measures for Untrustworthiness'' and the ''National Directory of Public Credit Information''. The ''National Directory'' establishes limitations on what types of credit information can be collected or used as a basis for social credit penalties or rewards. It describes three categories of data: #information that is appropriate for consideration, #information on violations that can be considered only when the circumstances of the violation are severe, and #information that can never be included as part of social credit. Appropriate information for consideration includes information on the execution of judicial judgments, administrative violations, among other material, and positive recognition for trustworthy behavior. Information appropriate only when the circumstances of the violation are severe include small payment arrears or public transportation fare evasion. The ''National Directory'' bans the consideration of private information like religious preferences or government petitioning activity. The December 2021 ''National List'''s purpose is to further standardize penalty measures. It specifies that administrative bodies cannot extent penalties beyond those provided in national level law and regulation. In a 2022 directive, the State Council stated that it will "actively explore innovative ways to use the credit concept and methods to solve difficulties, bottlenecks, and painful points that restrict the country's economic and social activities." On 14 November 2022, the NDRC issued a draft ''Law on the Establishment of the Social Credit System''. According to academic Vincent Brussee, the draft "was deeply unsatisfactory to SCS observers worldwide. It did not stipulate anything not already regulated in one of the many recent documents on the system. The draft just copy-pasted bits from those." Academic Haiqing Yu writes that "the draft law is a patchwork of existing policies and regulations that prioritise unification rather than clarification." As of 2022, over 62 different Social Credit System pilot programs were implemented by local governments. The pilot programs began following the release of the 2014 "Planning Outline for the Construction of a Social Credit System" by Chinese authorities. The government oversees the creation and development of these governmental pilots by requesting they each publish a regular "interdepartmental agreement on joint enforcement of rewards and punishments for 'trustworthy' and 'untrustworthy' conduct." Though some reports stated social credit would be powered by
artificial intelligence Artificial intelligence (AI) is the capability of computer, computational systems to perform tasks typically associated with human intelligence, such as learning, reasoning, problem-solving, perception, and decision-making. It is a field of re ...
(AI), as of 2023 penalty decisions were made by humans, not AI, and digitization remained limited. Credit systems for local government remained undeveloped and resemble incentivized loyalty programs like those run by airlines. Participation is fully voluntary and there are no enticement beyond losing access to minor rewards. For fear of overreach and pushback, the Chinese central government banned punishments for low scores and minor offences. During the city trials, pilot programs only saw limited participation. Many people living in pilot program cities are unaware of the programs. In
Xiamen Xiamen,), also known as Amoy ( ; from the Zhangzhou Hokkien pronunciation, zh, c=, s=, t=, p=, poj=Ē͘-mûi, historically romanized as Amoy, is a sub-provincial city in southeastern Fujian, People's Republic of China, beside the Taiwan Stra ...
, 210,059 users activated their social credit account, roughly 5% of the population of Xiamen; 60,000 or 1.5% of population in
Wuhu Wuhu () is a prefecture-level city in southeastern Anhui province of China, province, China. Sitting on the southeast bank of the Yangtze River, Wuhu borders Xuancheng to the southeast, Chizhou and Tongling to the southwest, Hefei City to the n ...
participated the system;
Hangzhou Hangzhou, , Standard Mandarin pronunciation: ; formerly romanized as Hangchow is a sub-provincial city in East China and the capital of Zhejiang province. With a population of 13 million, the municipality comprises ten districts, two counti ...
has 1,872,316 (15%) participants and fewer regularly use the system. Scores are not shared between cities as the scoring criteria and mechanisms are different. By 2023, most private social credit initiatives had been shut down by the People's Bank of China, and regulations had cracked down on most local scoring pilot programs.


Organization

Social credit in China is a broad policy category seeking to enforce legal obligations including laws, regulations, and contracts. Social credit does not itself bring new restrictions; it focuses on increasing implementation of existing restrictions. There are multiple social credit systems in China, some of which are designed and operated by the state, while others are operated by private companies. China's governmental approaches to social credit are described by various sets of documents issued by different institutions. There is no integrated system, nor a comprehensive document setting out a unified approach. Generally, the different approaches to social credit are united by the theme of increasing digitization, data collection, and data centralization. There is no unified, numerical credit score for businesses or individuals, rather national and local platforms use different evaluation or rating systems. Due to the differences in various pilot programs and a fragment system structure, information regarding the scoring mechanism is often conflicting. Inspired by
FICO FICO (legal name: Fair Isaac Corporation), originally Fair, Isaac and Company, is an American data analytics company based in Bozeman, Montana, focused on credit scoring services. It was founded by Bill Fair and Earl Isaac in 1956. Its FIC ...
, a numerical social credit score calculated by individual behavior and activities was given to citizens in certain pilot programs developed by financial firms or localized initiatives. However, these practices were not widespread applications and eventually, the numerical score mechanism was limited to private credit rating and loyalty programs. Private involvements were ultimately abandoned by the government. The system includes sanctions for the offenders; unlike in the past where the offenders were punished by one supervising agency or court, they now face sanctions from multiple agencies, greatly increasing their effect. Though the sanctions are severe, they affect a small part of companies and individuals. By publicizing these punishments and blacklists through state-media and through other agencies, the system is aimed to create a deterrence effect. Social credit is an example of China's "top-level design" () approach. It is coordinated by the Central Comprehensively Deepening Reforms Commission. Social credit when referred by the Chinese government, generally covers two different concepts. The first is "traditional financial creditworthiness" where it documents the financial history of individuals and companies and score them on how well they are able to pay off future loans. The second concept is “social creditworthiness” where the government is stating that there needs to be higher "trust in society". And to build such trust, the government had proposed to combat corruption, scammers, tax evasion, counterfeiting of goods, false advertising, pollution and other problematic issues, and to create the mechanisms to keep individuals and companies accountable for such transgressions.


Conceptualization

Scholars have conceptualized four different types of systems. These four systems are not interconnected, but relatively independent from each other with their own jurisdictions, rules and logic. ;Business trustworthiness system ( zh, 商务诚信体系): Blacklist system for discredited business organizations. This system is regulated by People's Bank of China financial credit-rating system and commercial credit-rating system. ;Government trustworthiness system ( zh, 政务诚信体系): Evaluation system targeting
civil servant The civil service is a collective term for a sector of government composed mainly of career civil service personnel hired rather than elected, whose institutional tenure typically survives transitions of political leadership. A civil service offic ...
s and government institutions. ;Social trustworthiness system ( zh, 社会诚信体系): Blacklist system for discredited individuals. Social trustworthiness system most closely relates to China's mass surveillance systems. ;
Judiciary The judiciary (also known as the judicial system, judicature, judicial branch, judiciative branch, and court or judiciary system) is the system of courts that adjudicates legal disputes/disagreements and interprets, defends, and applies the law ...
public trust system ( zh, 司法公信体系): Blacklist system for judgment defaulters. This system is regulated by Supreme People's Court. As of 2023, the government has only created a system that is primarily focused on assessing businesses rather than on individuals, and consists of a database that collects the data on corporate regulation compliance from a number of government agencies. Kendra Schaefer, head of tech policy research at the Beijing-based consultancy firm Trivium China, had described the system in a report for the US government's US-China Economic and Security Review Commission, as being “roughly equivalent to the IRS, FBI, EPA, USDA, FDA, HHS, HUD, Department of Energy, Department of Education, and every courthouse, police station, and major utility company in the US sharing regulatory records across a single platform”. The database can be openly accessed by any Chinese citizen on the newly created website called "Credit China". Its database also includes random information like a list of approved robot building companies, hospitals that have committed insurance fraud, universities that are deemed legitimate and a list of individuals who have defaulted on a court judgement.


Implementation

Social credit does not itself bring new restrictions; it focuses on increasing implementation of existing restrictions. Although the Chinese government announced in 2014 that it would implement a nationwide social credit system by 2020, as of 2023 no full-fledged system exists. Implementation of social credit is primarily focused on marketplace behavior. As of 2023, about 1% of companies and 0.3% of individuals receive social credit-related penalties per year.


Financial credit reporting

National financial credit reporting for businesses and individuals is provided by the People's Bank of China, which does not assign any numerical scoring.


Red Lists

Red Listing practices seek to incentivize exemplary personal behavior or business compliance. Red List practices vary significantly and there are no top-level regulations or guidance addressing red lists in detail. The most common benefit to red listed companies include reduced administrative burdens or simplified procedures. Part of the government logic for red listing companies is that it facilitates regulators' ability to focus on companies with a worse compliance record. Red Listed individuals may receive benefits like parking and public transit discounts or discount tourist site tickets.


Blacklists

Blacklisting is based on specific instances of misconduct, not any numerical score. The Central Government operates a number of national and regional blacklists based on various types of violations. The court system is available for businesses, organizations and individuals to appeal their violations. As of 2019, it typically took 2–5 years to be removed from the blacklist, but early removal is also possible if the blacklisted person "fulfills legal obligations or remedies". By the end of 2021, over five million citizens had been affected by the blacklisting scheme in some form. Three main types of blacklists exist: the judgment defaulter blacklist, sectoral blacklists, and no-fly/no-ride lists. Before being added to a blacklist, a person or company must be informed of the decision and the legal basis for it. Blacklists may be publicized, although as of at least 2023 there is no uniform method for doing so. Some blacklist portals can be searched online while others are uploaded as
PDF Portable document format (PDF), standardized as ISO 32000, is a file format developed by Adobe Inc., Adobe in 1992 to present documents, including text formatting and images, in a manner independent of application software, computer hardware, ...
s or image files. Blacklisted parties are sometimes displayed in public settings, including on the Internet, in newspapers, or television.


Judgment defaulter blacklist

Before 2013, the process of obtaining court-ordered enforcement against judgment debtors was fragmented. In 2013, the Supreme People's Court issued the ''Several Provisions on Announcement of the Judgment Defaulter Blacklist'' which became the foundational regulation for the judgment defaulter blacklist''.'' It stated that to be included on the list, a defaulter must be capable of complying with the court orders, but actively avoids doing so. Based on the idea that judgment defaulters should repay their debts before purchasing luxuries, once added to the list, judgment defaulters are restricted from: * travelling via plane, high speed train, or first class non-high speed train, * staying at star-rated hotels or golf courses, * purchasing real estate, * leasing "high-grade" office buildings, hotels, or apartments, * purchasing "non-business essential" vehicles, * holiday trips, * sending children to high fee private schools, * purchasing high-premium insurance products, and * "other non-life and non-work essential consumption behavior." In 2019, a Hebei court released an app showing a "map of deadbeat debtors" within 500 meters and encouraged users to report individuals who they believed could repay their debts. According to ''
China Daily ''China Daily'' ( zh, s=中国日报, p=Zhōngguó Rìbào) is an English-language daily newspaper owned by the Central Propaganda Department of the Chinese Communist Party. Overview ''China Daily'' has the widest print circulation of any ...
'', A spokesman of the court stated that "it's a part of our measures to enforce our rulings and create a socially credible environment." The Supreme People's Court's blacklist is one of its most important enforcement tools and its use has resulted in the recovery of tens of trillions of RMB for fines and delinquent repayments as of 2023. Chinese
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are increasingly placed on the national debtor blacklist by venture capitalists seeking a return of invested funds.


Sectoral blacklists

Many sectoral blacklists exist and are managed by a variety of regulatory and administrative bodies. Primarily, the penalties for being included on these blacklists are discretionary restrictions in administrative processes and interactions with the government. For example, regulators may exclude a company on a sectoral blacklist from participating in public procurement, revoke government funding or subsidies, cancel permits or revoke qualifications or certifications, or restrict the issuance of corporate bonds. Penalties cannot be developed ''ad hoc'' and must instead be based in national level law and regulation. Penalties from inclusion on sectoral blacklists may be imposed both on the violating company as well as legal representatives, senior company management, and the staff directly responsible for the violation that placed the company on the blacklist. Multiple government bodies may impose restrictions as a result of a person or company's inclusion on a sectoral blacklist. The availability of sectoral blacklist with the public also means that potential business partners may act accordingly and decline to deal with a blacklisted company.


No-fly and no-ride lists

Inclusion on the no-ride list or no-fly list results from specific instances of misconduct on trains or planes. Misconduct resulting in inclusion on the no-ride or no fly lists can include violation of safety regulations, harassing other passengers or transportation workers, smoking, scalping tickets, or using counterfeit tickets. Inclusion on the list prohibits a person from buying new tickets for a designated time period, usually six to twelve months. This is the only penalty under the no-ride or no-fly list, and inclusion on these blacklists has no impact in other areas of life or business. By May 2018, several million flight and high-speed train trips had been denied to people who had been blacklisted either through misbehavior on planes or trains, or failing to follow a court-ordered judgement. As of June 2019, according to the National Development and Reform Commission of China, 26.82 million air tickets as well as 5.96 million high-speed rail tickets had been denied to people who were deemed "untrustworthy" ( zh, labels=no, s=失信) (on a blacklist) and 4.37 million blacklisted people had chosen to fulfill their duties required by the law, such as repaying court-ordered judgements before being allowed to travel on high-speed rail and planes. In July 2019, additional 2.56 million flight tickets as well as 90 thousand high-speed train tickets were denied to those on the blacklist. The no-fly list is administered by
Civil Aviation Administration of China The Civil Aviation Administration of China (CAAC; ) is the civil aviation authority of the People's Republic of China, under the Ministry of Transport of the People's Republic of China, Ministry of Transport. It oversees civil aviation and inv ...
. The no-ride list is administered by the National Railway Administration.


Procedures for removal from blacklists

After a blacklist decision becomes effective, the blacklisted party can file for credit repair. Through the credit repair process, a violator corrects the impact of the underlying violation and commits to abide by laws and regulations in the future. Companies undergoing credit repair typically must supply evidence that they have corrected their violations. Companies may also have to agree to a credit pledge in which they commit to upholding laws and regulations, commit to abiding by contracts, and agree to be subject to more severe penalties for any future violations. If authorities approve of the request for credit repair, the violator is removed from the blacklist and penalties are ended.


For companies

The Social Credit System is meant to provide an answer to the problem of lack of trust on the Chinese market. , the corporate regulation function of the system appears to be more advanced than other parts of the system and the "Corporate Social Credit System" has been the primary focus of government attention. , over 73.3% of the enforcement action since 2014 is targeted toward companies, the largest part of all enforcements, while around 1-2% of all companies were sanctioned by the system annually. For businesses, the Social Credit System is meant to serve as a market regulation mechanism. The goal is to establish a self-enforcing regulatory regime fueled by
big data Big data primarily refers to data sets that are too large or complex to be dealt with by traditional data processing, data-processing application software, software. Data with many entries (rows) offer greater statistical power, while data with ...
in which businesses exercise "self-restraint" (企业自我约束). The basic idea is that with a functional credit system in place, companies will comply with government policies and regulations to avoid having their scores lowered by disgruntled employees, customers or clients. For example, the central government can use social credit data to offer risk-assessed grants and loans to
small and medium enterprises Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by many national agencies and international organizat ...
(SMEs), encouraging banks to offer greater loan access for SMEs. As currently envisioned, companies with good credit scores will enjoy benefits such as good credit conditions, lower tax rates, less custom checks, and more investment opportunities. Companies with bad credit scores will potentially face unfavorable conditions for new loans, higher tax rates, investment restrictions and lower chances to participate in publicly funded projects. Government plans also envision real-time monitoring of a business's activities. In that case, infractions on the part of a business could result in a lower score almost instantly. However, whether this will actually happen depends on the future implementation of the system as well as on the availability of technology needed for this kind of monitoring. To improve credit score, companies need to conform to the government rules, such as following the COVID-19 containment guidelines.


For government institutions

Government institutions receive the second highest number of enforcement actions, accounting for 13.3% of the penalties , while less than 0.1% of all government entities were sanctioned by the system annually. The social credit system targets government agencies, assesses local governments' performance and focuses on financial problems such as local governments' debts and contract defaults. The Central Government hopes the system can improve "government self-discipline." Local governments are also encouraged and rewarded by the social credit system if they successfully implement and follow the orders from the central government.


For individuals

As of 2020, individuals receive 10.3% of all enforcement actions, affecting around 0.15% to 0.3% of the national population annually. The dealing of the social credit system with individuals focuses on the financial trustworthiness of individual citizens. The dealing of the system with individuals is primarily focused on debt repayment, though major violations of the law have also been sanctioned. One major focus is that of the debt-dodger (''laolai''), a phrase which refers to those who can pay their debts but choose not to. A ''laolai'' blacklist is maintained by the Supreme People's Court. In addition to dishonest and fraudulent financial behavior, there have been proposals in some cities to officially list several behaviors as negative factors of credit ratings, including playing loud music or eating in
rapid transit Rapid transit or mass rapid transit (MRT) or heavy rail, commonly referred to as metro, is a type of high-capacity public transport that is generally built in urban areas. A grade separation, grade separated rapid transit line below ground su ...
s, violating traffic rules such as jaywalking and red-light violations, making reservations at restaurants or hotels, but not showing up, failing to correctly sort personal waste, fraudulently using other people's public transportation ID cards, etc.; on the other hand, including behavior listed as positive factors of credit ratings such as
donating blood A 'blood donation'' occurs when a person voluntarily has blood drawn and used for blood transfusion, transfusions and/or made into biopharmaceutical medications by a process called Blood fractionation, fractionation (separation of whole blood ...
, donating to
charity Charity may refer to: Common meanings * Charitable organization or charity, a non-profit organization whose primary objectives are philanthropy and social well-being of persons * Charity (practice), the practice of being benevolent, giving and sha ...
, volunteering for
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s, praising government efforts on social media and so on. However, due to the system mainly relying on digitized administrative documents, early efforts to integrate behavioral data into the system were mainly discarded. There are various punishments for debtors. Delinquent debtors are placed on blacklists maintained by Chinese courts and shared with the
Ministry of Public Security Ministry of Public Security can refer to: * Ministry of Justice and Public Security (Brazil) * Ministry of Public Security of Burundi * Ministry of Public Security (Chile) * Ministry of Public Security (China) * Ministry of Public Security of Co ...
, which controls the country's entry-exit checkpoints. Individuals with outstanding debts can be subject to exit bans and prevented from leaving the country as a way of encouraging or forcing the collection of debt. According to the ''
Financial Times The ''Financial Times'' (''FT'') is a British daily newspaper printed in broadsheet and also published digitally that focuses on business and economic Current affairs (news format), current affairs. Based in London, the paper is owned by a Jap ...
'', as of 2017, some 6.7 million debtors had already been placed on blacklists and prevented from exiting the country as a result of the new policy. Future rewards of having a high score might include easier access to loans and jobs and priority during bureaucratic paperwork. A person with poor social credit may be denied employment in places such as banks, state-owned enterprises, or as a business executive. The Chinese government encourages checking whether candidates names' appear on the blacklist when hiring. In certain test programs,
public humiliation Public humiliation or public shaming is a form of punishment whose main feature is dishonoring or disgracing a person, usually an offender or a prisoner, especially in a public place. It was regularly used as a form of judicially sanctioned puni ...
is used as a mechanism to deter sanctioned individuals. Mugshots of blacklisted individuals are sometimes displayed on large LED screens on buildings or shown before the movie in movie theaters. Certain personal information of the blacklisted people is deliberately made accessible to the public and is displayed online as well as at various public venues such as movie theaters and buses, while some cities have also banned children of "untrustworthy" residents from attending private schools and even universities. People with high credit ratings may receive rewards such as less waiting time at hospitals and government agencies, discounts at hotels, greater likelihood of receiving employment offers, and so on. According to Sarah Cook of
Freedom House Freedom House is a nonprofit organization based in Washington, D.C. It is best known for political advocacy surrounding issues of democracy, Freedom (political), political freedom, and human rights. Freedom House was founded in October 1941, wi ...
in 2019, city-level pilot projects for the social credit system have included rewarding individuals for aiding authorities in enforcing restrictions of religious practices, including coercing practitioners of
Falun Gong Falun Gong, also called Falun Dafa, is a new religious movement founded by its leader Li Hongzhi in China in the early 1990s. Falun Gong has its global headquarters in Dragon Springs, a compound in Deerpark, New York, United States, near t ...
to renounce their beliefs and reporting on
Uighurs The Uyghurs,. alternatively spelled Uighurs, Uygurs or Uigurs, are a Turkic ethnic group originating from and culturally affiliated with the general region of Central Asia and East Asia. The Uyghurs are recognized as the titular nationali ...
who publicly pray, fast during
Ramadan Ramadan is the ninth month of the Islamic calendar. It is observed by Muslims worldwide as a month of fasting (''Fasting in Islam, sawm''), communal prayer (salah), reflection, and community. It is also the month in which the Quran is believed ...
or perform other
Islam Islam is an Abrahamic religions, Abrahamic monotheistic religion based on the Quran, and the teachings of Muhammad. Adherents of Islam are called Muslims, who are estimated to number Islam by country, 2 billion worldwide and are the world ...
ic practices. In an October 2022 study, professors from
Princeton University Princeton University is a private university, private Ivy League research university in Princeton, New Jersey, United States. Founded in 1746 in Elizabeth, New Jersey, Elizabeth as the College of New Jersey, Princeton is the List of Colonial ...
,
Freie Universität Berlin The Free University of Berlin (, often abbreviated as FU Berlin or simply FU) is a public university, public research university in Berlin, Germany. It was founded in West Berlin in 1948 with American support during the early Cold War period a ...
and
Pennsylvania State University The Pennsylvania State University (Penn State or PSU) is a Public university, public Commonwealth System of Higher Education, state-related Land-grant university, land-grant research university with campuses and facilities throughout Pennsyl ...
also found that "repressing protesters, petitioners, journalists, and political activists via the SCS is common among Chinese localities."


For social organizations

As of 2020, non-government organizations receive 3.3% of all enforcement actions. Although the enforcement remain a small group in numerical terms, but their inclusion has an important implication as it affects foreign NGOs operated within China.


Examples of city trial policies

Most initiatives under the social credit system do not involve actual numerical scores; instead, documentation of specific offenses is recorded in one's credit profile, the exception being the trial programs launched by some cities and communities. The actual policy varies greatly from city to city, and participation is voluntary. Local credit profiles are not shared between cities. Since the early 2010s, several cities in China launched pilot programs to test and develop a potential social credit system. Some of these programs assigned scores to individuals, but many of the scoring programs faced criticism. The main criticism of these pilot programs came from Chinese state media, which denounced these practices as having unfairly restricted legal rights or tracked personal behaviors that were completely unrelated to the concept of “credit.” In 2019, the Chinese government reinforced this criticism by issuing clear guidelines to prevent misuse, explicitly stating that "scores" can not be used to punish citizens. As a result, many pilot programs were discontinued, while some pilot cities revised their programs. Examples were
Wenzhou Wenzhou; Chinese postal romanization, historically known as Wenchow is a prefecture-level city in China's Zhejiang province. Wenzhou is located at the extreme southeast of Zhejiang, bordering Lishui, Zhejiang, Lishui to the west, Taizhou, Zheji ...
, which abandoned their initial program and, in 2019, revised it to be an "encouragement-only scheme". Another was Rongcheng, which changed their pilot program in 2021, so that it was strictly voluntary and can only issue rewards. According to a 2022 article from the Mercator Institute for China Studies (MERICS), the only social credit system programs that continue to have "personal scores" of individuals are strictly for issuing positive incentives only. Under some policies, higher scores can earn a participant cheaper public transportation, shorter security lines in subways, or tax reductions.


Public opinions

Writing in 2023, academic Vincent Brussee observes that European misconceptions of social credit in China have become a source of amusement among Chinese Internet users.


Approvals

A series of studies have concluded that social credit is well-received domestically. In a 2018 study, 80% of respondents either strongly approved or approved of China's Social Credit System, while one percent disapproved. The study was conducted by Professor Genia Kostka of
Free University of Berlin The Free University of Berlin (, often abbreviated as FU Berlin or simply FU) is a public university, public research university in Berlin, Germany. It was founded in West Berlin in 1948 with American support during the early Cold War period a ...
and was based on a cross-regional Internet survey of 2,209 Chinese citizens of various backgrounds. The study found "a surprisingly high degree of approval of SCSs across respondent groups" and that "more socially advantaged citizens (wealthier, better-educated and urban residents) show the strongest approval of SCSs, along with older people". Kostka explained in the paper that "while one might expect such knowledgeable citizens to be most concerned about the privacy implications of SCS, they instead appear to embrace SCSs because they interpret it through frames of benefit-generation and promoting honest dealings in society and the economy instead of privacy-violation." In August 2019, assistant researcher Zhengjie Fan of China Institute of International Studies published an article, claiming that the current punishment policies such as the blacklist do not overstep the limits of law. He argued that since 2014, China's Social Credit System and the credit system of the market had grown to complement each other, forming a mutually beneficial interaction. According to ''Doing Business 2019'' by
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group ...
which ranked "190 countries on the ease of doing business within their borders", China rose from 78th place in previous year to 46th place and Fan claimed that the Social Credit System has played an important role. In 2020, it further improved to 31st place in the now-defunct
Ease of Doing Business index Ease or EASE may refer to: Computing * Ease (programming language) * Enhanced Acoustic Simulator for Engineers, software for optimizing acoustics Health and medicine * Methylone, marketed briefly in New Zealand as Ease *Examination of Anomalous ...
. In an October 2022 study, professors from Princeton University, Freie Universität Berlin (Genia Kostka), and Pennsylvania State University discovered through a field survey of college students in China that "revealing the repressive potential of the SCS significantly reduces support for the system, whereas emphasizing its function in maintaining social order does not increase support." Additionally, the professors found that a nationwide survey of Chinese netizens showed higher support for the SCS among Chinese citizens who learned about it through state media.


Criticism

Chinese academics have produced a substantial body of work analyzing social credit in China. As of 2023, the large majority of Chinese scholarships accept the legitimacy of social credit as a whole, although there are also criticisms of different approaches or implementation efforts. In several instances, academics' criticisms of social credit have been adopted and re-issued by state media outlets, including
Xinhua Xinhua News Agency (English pronunciation: ),J. C. Wells: Longman Pronunciation Dictionary, 3rd ed., for both British and American English or New China News Agency, is the official State media, state news agency of the China, People's Republic ...
and ''
People's Daily The ''People's Daily'' ( zh, s=人民日报, p=Rénmín Rìbào) is the official newspaper of the Central Committee of the Chinese Communist Party (CCP). It provides direct information on the policies and viewpoints of the CCP in multiple lan ...
''. In October 2019, Professor Kui Shen of the Law School of
Peking University Peking University (PKU) is a Public university, public Types of universities and colleges in China#By designated academic emphasis, university in Haidian, Beijing, China. It is affiliated with and funded by the Ministry of Education of the Peop ...
published a paper in ''China Legal Science'', suggesting that some of the then-current credit policies violated the "
rule of law The essence of the rule of law is that all people and institutions within a Body politic, political body are subject to the same laws. This concept is sometimes stated simply as "no one is above the law" or "all are equal before the law". Acco ...
" or "''
Rechtsstaat ''Rechtsstaat'' (; lit. "state of law"; "legal state") is a doctrine in continental European legal thinking, originating in Germany, German jurisprudence. It can be translated into English as "rule of law", alternatively "legal state", state of l ...
"'': that they infringed the legal rights of residents and organizations, possibly violated the principle of respecting and protecting human rights, especially the right to reputation, the
right to privacy The right to privacy is an element of various legal traditions that intends to restrain governmental and private actions that threaten the privacy of individuals. Over 185 national constitutions mention the right to privacy. Since the globa ...
as well as personal dignity and overstepped the boundary of reasonable punishment. In May 2020, Chinese investigative media group
Caixin Caixin Media () is a Chinese media group based in Beijing known for business and investigative journalism. Structure The founder and publisher is Hu Shuli, a former Knight Fellow in journalism at Stanford University, and an honorary doctora ...
reported that business social credit systems in China were insufficient in deterring problematic business activities and that the social credit system was easy to game in favour of businesses. China's Social Credit System has been implicated in a number of controversies. Western critics view social credit as an intrusive mechanism that infringes on privacy. In October 2018,
U.S. Vice President The vice president of the United States (VPOTUS) is the second-highest ranking office in the executive branch of the U.S. federal government, after the president of the United States, and ranks first in the presidential line of succession. Th ...
Mike Pence Michael Richard Pence (born June 7, 1959) is an American politician and lawyer who served as the 48th vice president of the United States from 2017 to 2021 under President Donald Trump. A member of the Republican Party (United States), Repub ...
criticized the social credit system, describing it as "an
Orwellian ''Orwellian'' is an adjective which is used to describe a situation, an idea, or a societal condition that 20th-century author George Orwell identified as being destructive to the welfare of a free and open society. It denotes an attitude and ...
system premised on controlling virtually every facet of human life." In January 2019,
George Soros George Soros (born György Schwartz; August 12, 1930) is an American investor and philanthropist. , he has a net worth of US$7.2 billion, Note that this site is updated daily. having donated more than $32 billion to the Open Society Foundat ...
criticized the social credit system, saying it would give CCP leader Xi Jinping "total control over the people of China". From 2017 to 2018, researchers argued that the credit system would be part of the government's plan to automate their authoritarian rule over the Chinese population. In June 2019, Samantha Hoffman of the
Australian Strategic Policy Institute The Australian Strategic Policy Institute (ASPI) is a defence and strategic policy think tank based in Canberra, Australian Capital Territory, founded by the Australian government, and funded by the Australian Department of Defence along with o ...
argued that "there are no genuine protections for the people and entities subject to the system... In China there is no such thing as the rule of law. Regulations that can be largely apolitical on the surface can be political when the Chinese Communist Party (CCP) decides to use them for political purposes." In August 2018, Professor Genia Kostka of
Free University of Berlin The Free University of Berlin (, often abbreviated as FU Berlin or simply FU) is a public university, public research university in Berlin, Germany. It was founded in West Berlin in 1948 with American support during the early Cold War period a ...
stated in her published paper that "if successful in
heir Inheritance is the practice of receiving private property, titles, debts, entitlements, privileges, rights, and obligations upon the death of an individual. The rules of inheritance differ among societies and have changed over time. Offi ...
effort, the Communist Party will possess a powerful means of quelling dissent, one that is comparatively low-cost and which does not require the overt (and unpopular) use of coercion by the state." In December 2017,
Human Rights Watch Human Rights Watch (HRW) is an international non-governmental organization that conducts research and advocacy on human rights. Headquartered in New York City, the group investigates and reports on issues including War crime, war crimes, crim ...
described the proposed social credit system as "chilling" and filled with arbitrary abuses.


Misconceptions

There has been a degree of misreporting and misconceptions in English-language mass media due to translation errors,
sensationalism In journalism and mass media, sensationalism is a type of editorial tactic. Events and topics in news stories are selected and worded to excite the greatest number of readers and viewers. This style of news reporting encourages biased or emoti ...
, conflicting information and lack of comprehensive analysis. Examples of such popular misconceptions include a widespread misassumption that Chinese citizens are rewarded and punished based on a numerical score (social credit score) assigned by the system, that its decisions are taken by AI and that it constantly monitors Chinese citizens. * In July 2019, ''
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'' reported that there existed misconceptions regarding the Social Credit System of China. It argued that "Western concerns about what ''could'' happen with China's Social Credit System have in some ways outstripped discussions about what's already really occurring...The exaggerated portrayals may also help to downplay surveillance efforts in other parts of the world." The rise of misconception, according to Jeremy Daum of
Yale University Yale University is a Private university, private Ivy League research university in New Haven, Connecticut, United States. Founded in 1701, Yale is the List of Colonial Colleges, third-oldest institution of higher education in the United Stat ...
, is contributed by translation errors, the difference in word usage and so on. * In May 2019, ''Logic'' published an article by Shazeda Ahmed, who argued that " reign media has distorted the social credit system into a technological dystopia far removed from what is actually happening in China." She pointed out that common misconceptions included the beliefs that surveillance data is connected with a centralized database; that human activities online and offline are assigned with actual values that can be deducted and that every citizen in China has a numerical score that is calculated by computer algorithm. * In March and February 2019, ''
MIT Technology Review ''MIT Technology Review'' is a bimonthly magazine wholly owned by the Massachusetts Institute of Technology. It was founded in 1899 as ''The Technology Review'', and was re-launched without "''The''" in its name on April 23, 1998, under then pu ...
'' stated that, " the West, the system is highly controversial and often portrayed as an AI-powered surveillance regime that violates human rights''.''" However, the magazine reported that "many scholars argue that social credit scores won't have the wide-scale controlling effect presumed...the system acts more as a tool of propaganda than a tool of enforcement" and that " hers point out that it is simply an extension of Chinese culture's long tradition of promoting good moral behavior and that Chinese citizens have a completely different perspective on privacy and freedom." * In November 2018, ''
Foreign Policy Foreign policy, also known as external policy, is the set of strategies and actions a State (polity), state employs in its interactions with other states, unions, and international entities. It encompasses a wide range of objectives, includ ...
'' listed some factors which contributed to the misconception of China's credit system. The potential factors included the scale and variety of the social credit system program and the difficulties of comprehensive reporting that comes with it. * In May 2018, Rogier Creemers of
Leiden University Leiden University (abbreviated as ''LEI''; ) is a Public university, public research university in Leiden, Netherlands. Established in 1575 by William the Silent, William, Prince of Orange as a Protestantism, Protestant institution, it holds the d ...
stated that despite the Chinese government's intentions of utilizing big data and
artificial intelligence Artificial intelligence (AI) is the capability of computer, computational systems to perform tasks typically associated with human intelligence, such as learning, reasoning, problem-solving, perception, and decision-making. It is a field of re ...
, the regulatory method of SCS remained relatively crude. His research concluded that it is "... perhaps more accurate to conceive of the SCS as an ecosystem of initiatives broadly sharing a similar underlying logic, than a fully unified and integrated machine for social control." * In November 2018, Bing Song, director of the
Berggruen Institute The Berggruen Institute is a Los Angeles-based think tank founded by Nicolas Berggruen. History Berggruen Institute was formed in 2010 by founder Nicolas Berggruen and co-founder Nathan Gardels as a global network of "thinkers" dedicated to ...
China Center, posted an opinion piece in ''
The Washington Post ''The Washington Post'', locally known as ''The'' ''Post'' and, informally, ''WaPo'' or ''WP'', is an American daily newspaper published in Washington, D.C., the national capital. It is the most widely circulated newspaper in the Washington m ...
'', arguing that the Western media and institutions have misreported the details and mechanics of the Social Credit system. The article suggested that media have confused private score reporting mechanisms with the national system. He also noted that penalties are executed based on the Supreme Court laws and regulations, while private scoring companies and government agencies are not capable of enacting penalties. He argued the widespread media reports often ignored the fact that local governments can be targeted in the blacklists and the scoring systems and its effects were exaggerated by many media stories. He also argued that the cultural expectations of the government and its role in China are different than that of in other countries. * In March 2021, '' The Diplomat'' remarked that the assumption by Western observers that the Social Credit System is an Orwellian surveillance system exaggerates the reality and purpose of the system in real life. Despite the claim, the social credit system is "an extension of bond issuance risk assessment credit ratings introduced in China in the 1980s" and primarily serves the function of a
financial risk Financial risk is any of various types of risk associated with financing, including financial transactions that include company loans in risk of default. Often it is understood to include only downside risk, meaning the potential for financi ...
assessment tool. * In October 2021, the Washington-based
think tank A think tank, or public policy institute, is a research institute that performs research and advocacy concerning topics such as social policy, political strategy, economics, military, technology, and culture. Most think tanks are non-governme ...
The Jamestown Foundation The Jamestown Foundation is a Washington, D.C.–based non-partisan defense policy think tank. Founded in 1984 as a platform to support Soviet defectors, its stated mission is to inform and educate policy makers about events and trends, which i ...
explored the function of the Social Credit System and concluded that there were widespread misinterpretations regarding the function and mechanism of the SCS. The think tank found that misinformed perceptions of an algorithm-driven citizen-rating system are originated from early analyses that confused the regulation-enforcement mechanisms and the morality propaganda campaigns of the SCS initiative. Furthermore, many failed to distinguish between the government regulations and the private credit rating systems. Corporations hyperbolically promoted the scores' predictive abilities, which may have resonated with Western anxiety and concerns surrounding corporate data collection and government access to personal information. * In 2022, academics Diana Fu and Rui Hou noted the persistence of Western misconceptions in their article ''Rating Citizens with China's Social Credit System'', stating, "Western media articles initially compared the system to an episode of the British sci-fi series ''
Black Mirror ''Black Mirror'' is a British anthology series, anthology television series created by Charlie Brooker. Most episodes are set in near-future dystopias containing Science fiction, sci-fi technology—a type of speculative fiction. The series i ...
'' in which individuals' every day behavior, down to the minutiae, were tracked and rated by other people and a "big brother" government. Since then, scholars and journalists have sought to dispel this dystopian depiction of the social credit system, but the image continued to live on, particularly after the Trump administration started to use it as part of its anti-China policy in 2017 and 2018." * In 2023, academic Filip Šebok wrote that perhaps the most common myth associated with social credit is that there is a single numerical score that records individuals' behavior. No such score exists. * Academic Vincent Brussee writes that as of 2023, "hundreds of headlines have discussed the system, but few have systematically broken down what the ocial credit systemis and how it works. Some studies refer to the 'breathtaking' ambition of the system and the 'massive quantities of behavioural data' going into the system without substantiating these claims in any way. Others rely on assumptions of what the system will look like, erroneously speculating that everyone will receive a social credit score, that this score will be publicly available, and that a bad rating will have far-reaching consequences. It is like a game of
Chinese Whispers Telephone (American English and Canadian English), or Chinese whispers (some Commonwealth English), is an internationally popular children's game in which messages are whispered from person to person and then the original and final messages are ...
gone wrong."


Misconceptions of Zhima Credit and 2015 pilot programs

Alibaba's Zhima Credit, also rendered in English as Sesame Credit, is a private market credit initiative which ultimately became a loyalty program. It has frequently been mistaken for social credit. In 2015, the PBOC designated eight private companies to pilot personal credit reporting (''zhengxin'') mechanisms. Because the pilot programs were ''zhengxin'' mechanisms, they had little connection to the idea of social credit more broadly. Zhima Credit was one of the pilot ''zhengxin'' mechanisms. It was an opt-in scoring initiative proposed to assess users' credit worthiness even if those users lacked formal credit history. It did not include standard industry metrics like income or debts, instead it assessed factors like user spending ability and whether users showed up for travel bookings. Following the release of Zhima Credit, there was significant media speculation that it might turn into a national social credit system by 2020. This did not occur. Zhima Credit and the other pilot initiatives were never linked to the broader financial system. Zhima Credit did not prove to be an effective credit evaluation mechanism because the data showed no statistically significant link between its metrics and a user's ability to repay loans. In one interview, Alibaba's technology director suggested that people who played too many video games might be considered less trustworthy. Various news outlets around the world incorrectly suggested that people could lose social credit for playing too many video games. No video game playing metric was ever implemented. Ultimately Zhima Credit became a loyalty program that rewarded users for using Alibaba services and shopping platforms. PBOC decided not to extend the credit licenses of the eight private pilot programs from 2015.


In popular culture

In 2021, the social credit system was popularized as an
Internet meme An Internet meme, or meme (, Help:Pronunciation respelling key, ''MEEM''), is a cultural item (such as an idea, behavior, or style) that spreads across the Internet, primarily through Social media, social media platforms. Internet memes manif ...
on various
social media Social media are interactive technologies that facilitate the Content creation, creation, information exchange, sharing and news aggregator, aggregation of Content (media), content (such as ideas, interests, and other forms of expression) amongs ...
platforms. ''
VICE A vice is a practice, behaviour, Habit (psychology), habit or item generally considered morally wrong in the associated society. In more minor usage, vice can refer to a fault, a negative character trait, a defect, an infirmity, or a bad or unhe ...
'' reported that the memes' popularity reflects the "widespread discontent toward the Chinese government over its restrictions of people's freedoms", however, the article noted the trend continued the existing misapprehension and misinformation regarding the SCS mechanism, such as the idea that people in China are rewarded or punished based on a numerical "social credit score". The joke is often posed as a positive or negative action towards the Chinese government which affects the poster's "social credit score" positively or negatively. According to a 2022 article in ''
The Spectator ''The Spectator'' is a weekly British political and cultural news magazine. It was first published in July 1828, making it the oldest surviving magazine in the world. ''The Spectator'' is politically conservative, and its principal subject a ...
'', the Western narrative of the "social credit score" at the time received widespread mockery and satirical comments from the Chinese Internet community, due to the Western perception being drastically different from the reality in China.


Comparison to other countries


Russia

Around 80% of Russians will reportedly get a digital profile that will document personal successes and failures in less than a decade under the government's comprehensive plans to digitize the economy. Observers have compared this to China's social credit system, although
Deputy Prime Minister A deputy prime minister or vice prime minister is, in some countries, a Minister (government), government minister who can take the position of acting prime minister when the prime minister is temporarily absent. The position is often likened to th ...
Maxim Akimov has denied that, saying a Chinese-style social credit system is a "threat".


Spain

In Spain, people who cannot repay their home mortgages may declare bankruptcy. Bankruptcy and foreclosure discharges the obligation to pay mortgage interest, but not mortgage principal. If mortgage principal is not paid, the debtor is placed on a list of untrustworthy people.


United Kingdom

In 2018, the
New Economics Foundation The New Economics Foundation (NEF) is a Great Britain, British think-tank that promotes "social, economic and environmental justice". NEF was founded in 1986 by the leaders of The Other Economic Summit (TOES) with the aim of working for a "new m ...
compared the Chinese citizen score to other rating systems in the United Kingdom. These included using data from a citizen's credit score, phone usage, rent payment, and so on, to filter job applications, determine access to social services, determine advertisements served, etc.


United States

Some media outlets have compared the social credit system to credit scoring systems in the United States. According to Mike Elgan of ''
Fast Company ''Fast Company'' is an American business magazine published monthly in print and online, focusing on technology, business, and design. It releases six print issues annually. History ''Fast Company'' was founded in November 1995 by Alan Webb ...
'', "an increasing number of societal "privileges" related to transportation, accommodations, communications and the rates US citizens pay for services (like insurance) are either controlled by technology companies or affected by how we use technology services. And
Silicon Valley Silicon Valley is a region in Northern California that is a global center for high technology and innovation. Located in the southern part of the San Francisco Bay Area, it corresponds roughly to the geographical area of the Santa Clara Valley ...
's rules for being allowed to use their services are getting stricter."


Venezuela

In 2017,
Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many Federal Dependencies of Venezuela, islands and islets in the Caribbean Sea. It com ...
started developing a smart-card ID known as the "carnet de la patria" or "fatherland card", with the help of the Chinese telecom company ZTE. The system included a database which stores details like birthdays, family information, employment and income, property owned, medical history, state benefits received, presence on social media, membership in a political party and whether a person voted. Many in Venezuela have expressed concern that the card is an attempt to tighten social control through monitoring all aspects of daily life.


References


External links

* {{Portal bar, Society, China Data Reputation management Credit scoring Nudge theory Social status Social systems Social influence Social impact Politics of the People's Republic of China Social information processing Technology in society * Sociology of technology Government by algorithm Internet memes introduced in 2021