I have fond memories of living in China as a teen.
Back then, it took like 12 hours to drive from Beijing to my family’s home in Fuxin because the roads were so bad. The last time I visited, with David in 2005, I think it took like half that.
Point being, things have changed a lot and continue to change.
One change the rest of the world considers highly controversial is the implementation of China’s social credit system.
When I first heard about it, my gut reaction was the same as most – this can’t possibly be going anywhere good!
As I dived into researching it, however, I discovered it’s more multi-faceted than I would have guessed.
A Simple Introduction to China’s Highly Misunderstood Social Credit System (SCS)
In 2015, the People’s Bank of China granted approval to 8 different private tech companies to develop pilot programs for scoring consumer credit. These pilots are voluntary for consumers.
There have also been several dozen pilot cities trying out different versions of social credit systems (as early as 2010) that the local governments developed, which aren’t voluntary but also don’t necessarily affect most people’s lives at all.
Although the goal of the government does seem to be to establish social credit as a way of life nationwide, it’s unlikely to be quite as unified as foreign opinion assumes, lead in part by the common misunderstanding that these aforementioned local government and private company pilots are one and the same.
Basically, the SCS isn’t one centralized system. It’s more aptly described as a social credit ecosystem, with various types of social credit potentially working together… at some point… in some capacity…[I recommend listening to this podcast episode for a better overview.]
Can there be anything good about China’s social credit system?
One of the first things that came to mind for why the social credit system could never work and would just make it worse for those less fortunate is because of how much China is built on bribes and who you know… it’s a deeply ingrained mindset.
What I didn’t realize is that the country has a goal of changing that way of doing things, and has been cracking down much more strongly, at least on the surface, since President Xi Jinping came to power in 2013.
In fact, the social credit system is apparently meant to address the cheating and corruption and create more transparency and integrity. While there are political motivations for sure, it’s largely an attempt to motivate morality in general and develop financial trust.
Problems Social Credit Legitimately Addresses in China
Lack of Credit History
China has been a cash-based economy until recently, so many Chinese had no credit history or way of obtaining even basic credit-based services or personal financing.
Lack of Trust
“People often expect to be cheated or to get in trouble without having done anything.” Issues like food sanitation, counterfeit products, etc. are commonplace.
“Made in China”, for example, has long been synonymous with “cheap” and automatically suspect, which is problematic nationally as well as internationally.
For many Chinese citizens, it’s merely seen as a way for good people to finally have an advantage over those who get around laws and ignore common decency.
Lack of Moral Motivation
China has had no driving religious system
Where one could posit that religion has acted as somewhat of a panopticon for societies where it is prevalent, the social credit system seeks to be that “eye in the sky” for China with millions of cameras using facial recognition software.
It’s had a big hand in helping to enforce the law. Where behaviors like yielding to pedestrians at the crosswalk were initially consequence-motivated, they have now become more of a habit.
Gamifying good behavior is really about a self-guiding credit system that supports a self-guiding market system.
Should we really be concerned about the social credit system or does it just do a good job of scratching a fear itch for us?
The foundational mindset of the U.S. is, understandably, resisting governmental power, but nevertheless has an ingrained underlying fear and default distrust.
There are obstacles to implementing a centralized social credit system in China, but public opinion doesn’t really seem to be one of them. Chinese are already used to extensive governmental control, and the promise of improving social trust is something most people welcome.
Despite having one of the more successful social credit programs, apparently many citizens of Rongcheng don’t even notice its existence, relating to it as “just part of the government’s usual propaganda. It has nothing to do with our lives.” (Some say it’s really more like a rap sheet than a credit score.)
Dings to one’s score are basically restricted to breaking the law, and those who are aware of the system have largely embraced it, leading to institutions and neighborhoods voluntarily adopting their own systems of consequence and reward in addition to that implemented by the city.
One cause for concern of the future of the social credit system might be the Chinese government sentiment, “once untrustworthy, always restricted”, however, there also seems to be an overall desire to keep its citizens happy.
After all, “Keeping people happy is a much more effective means than employing force.”
Are we really so far off from something like China’s social credit as we like to think?
We’re already conditioned to trade privacy for convenience – being tracked, and rating businesses and each other through our use of things like:
- our smartphone GPS and map apps, EZPass, etc.
- mobile and online purchases and bill pay
- credit bureaus and credit ratings
- social service ratings like Uber and Postmates
- “canceled culture” and public shaming through social media
While many of us have reservations about our information being gathered by these types of systems, we feel some solace that they’re at least decentralized.
Amazon, who has worked hard to become integrated into our everyday lives in an essentially irresistible way,
Creditworthiness, after all, is the force which drives these kinds of systems, both in the U.S. and abroad – it promises the securing of a brighter future.
When lending was largely community-based, banks would ask around the community to determine their opinion of your eligibility and you could be “blacklisted“.
The start of our credit system in the U.S. is not as far off from that of China as you might think.
One example is a credit reporting firm founded in 1899 which developed files on millions of Americans,
People have been warning of the perils of credit reporting since it started, and the computerization of such files was especially feared.
Even now, it’s not known what all factors into your credit report, as lenders have their own proprietary standards and methods. Your social network and social media use in general may play more into it than you think, especially in other countries.
The goal, after all, is “to determine not just who can repay their debts, but who will choose to do so. To answer this essentially moral question—and to compel ‘good’ behavior—credit bureaus have developed surveillance and information-sharing techniques rivaling anything in the arsenal of the state.“
While living in an increasingly cashless society may be cause for our own concerns, it doesn’t stop most of us from embracing the convenience it provides.
“In a cashless society, the cash has been converted into numbers, into signals, into electronic currents. In short: Information replaces cash… But wherever information gathers and flows, two predators follow closely behind it: censorship and surveillance. Where money becomes a series of signals, it can be censored; where money becomes information, it will inform on you.” [source]
Our restrictions may not be as limiting, but we do have consequences just the same: things like insurance rates going up, drivers licenses being taken away, being required to report our presence in a neighborhood, being denied jobs, etc. depending on what kind of “blacklist” we get ourselves put on.
I daresay we find these restrictions to be largely just and proportionate. I think the bottom line of what makes us nervous about the Chinese system is the issue of freedom of speech and the guilt by association tendencies, neither of which are anything new there.
As important as freedom of speech is in the U.S., there’s plenty that’s reduced the general population’s impression of what that even is in recent years, not to mention caused people to be much more cautious.
In China, much personal information is being collected with little to no protections in place.
In order to implement a national centralized system for the coordination of data, individual government departments would have to work together, which is something most aren’t that interested in doing. Not only does sharing information decrease their commercial and political sway, it also creates more work for them.
It looks like some people are more willing to work together than others, however, as an article from November 2018 states:
“Recently, under regulators’ coordination, ZC [Zhima Credit]
This could perhaps be compared to a FICO score, other than the government involvement? Definitely something to keep an eye on as it develops…
As we embrace convenience in order to give ourselves more time for what matters to us, it’s probably wise to also stay competent, independent of technology… maybe consider some sort of escape-to-the-country back-up plan… but overall, stay optimistic, aware, and engaged in the process.
Other useful sources: