Social Credit System
[4] 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.
[13][14][7] The Chinese government's stated aim is to enhance trust in society with the system and regulate businesses in areas such as food safety, intellectual property, and financial fraud.
[16]: 18 In September 1999, the Institute of Economics of the Chinese Academy of Social Sciences began a research project on establishing a national credit management system.
[16]: 18 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.
[8] 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.
[16]: 79 It set broad goals intended to be reached by 2020: In 2015, the People's Bank of China licensed eight companies to begin a trial of social credit systems.
[10] Among these eight firms is Sesame Credit (owned by Alibaba Group and operated by Ant Financial), Tencent, and China's biggest ride-sharing and online-dating services, Didi Chuxing and Baihe.com, respectively.
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.
[26] 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.
[32] Ultimately, Chinese government dropped the support for privately developed credit rating system, and these pilot projects remained as corporate loyalty programs.
[7] In December 2017 the National Development and Reform Commission 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.
[16]: 135 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.
[16]: 139 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.
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.
[40][7] Inspired by FICO,[41] 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.
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.
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”.
"[16]: 108–109 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.
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.
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.
[17] 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 transits,[57] violating traffic rules such as jaywalking and red-light violations,[58][59] making reservations at restaurants or hotels, but not showing up,[60] failing to correctly sort personal waste,[61][62][63] fraudulently using other people's public transportation ID cards,[64] etc.
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.
[4] Under some policies, higher scores can earn a participant cheaper public transportation, shorter security lines in subways, or tax reductions.
[80]: 204 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.
[17] The study was conducted by Professor Genia Kostka of Free University of Berlin and was based on a cross-regional Internet survey of 2,209 Chinese citizens of various backgrounds.
[24] 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.
"[24] 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.
[16]: 7–8 In several instances, academics' criticisms of social credit have been adopted and re-issued by state media outlets, including Xinhua and People's Daily.
"[112] In January 2019, George Soros criticized the social credit system, saying it would give CCP leader Xi Jinping "total control over the people of China".
[134] 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.
