Moral, honest, helpful: China's Social Credit system revisited
Just when people were starting to forget about it, a hot new update to the social credit system just dropped. But in reality the CCP’s been working on this for a while…
The internet has been buzzing over the recent meeting between Xi and Biden, but we’ve got bigger fish to fry than over-hyped non-committal talks. Since 2014, we’ve been waiting with baited breath for meaningful updates to China’s Social Credit System (SCS) guidelines, and finally the government has dropped the “Law of the People's Republic of China on the Construction of Social Credit System” and opened it up to the public for comment (Official Chinese version; unofficial translated version). According to the National development and reform commission (which oversees the planning of the Chinese economy and is one of the major agencies in charge of formulating the SCS), “relevant units and people from all walks of life” are invited to give their opinions on the document between November 14 to December 14 using the form on the website.
The document is around 30 pages long and has 110 articles, mostly written in the typical, overwrought, Chinese bureaucratic language. While I think it’s important to look into the language of the draft law to understand what the CCP is trying to achieve, I think we all know by now that the language will be vague enough that it will remain open to interpretation so it can be manipulated by power-holders in ways that most of us wouldn’t even be able to predict.
What is a bit more interesting to me is the fact that while this may be the latest update from the Twitter-sphere, the Chinese government has been working steadily to develop their social credit system in incremental steps, testing out different demonstration zones across the country. Honestly, this is something that I probably should have been aware of, but many of these moves are quite subtle, are implemented in smaller, lesser known cities, or have only just recently been publicly announced.
“In January 2021, the National Development and Reform Commission released a national “standard” for credit information reporting, a measure intended to encourage cross-referencing and acceptance of social credit data between provinces. Meanwhile, the Central Committee of the Chinese Communist Party (CCP) issued a new roadmap to 2025 for the “construction of a rule of law society” in which the social credit system is set to play a key role.” - The Diplomat
The National Development and Reform Commission announces groups of social credit system construction demonstration areas, the third ‘batch’ of which were announced in 2021. These cities and districts are trusted with implementing their own systems for monitoring local government, individuals and businesses, and developing systems of reward and punishment that can be reproduced at scale across the nation. As we’ll see, these pilot programmes are all different, but have contributed in various ways to the new draft law.
Let’s take a look at the new drafted law first, and see how this draft reflects the numerous pilot schemes held around the country, and what’s been left out and open to interpretation.
The letter of the law
So as to avoid any doubt as to its aim, the very first article states the purpose of the law is to “innovate mechanisms for societal governance, optimize the business environment, standardize order in the Socialist market economy, raise the entire society's awareness of creditworthiness, advocate the Core Socialist Values, and complete a credit reporting system that covers the entire society.”
This applies to people, businesses, and governments at different levels, so essentially all of society in all of its forms. Different government and regulatory departments can share information freely between them, and local administrators can form incentives and punishments as they deem fit. When they say ‘credit’ they do not, as some people have put it, just mean a financial credit score. Credit covers all aspects of one's conduct in society, and the SCS is set up to monitor “creditworthiness in government affairs, creditworthiness in commercial affairs, societal creditworthiness, and judicial credibility.” It’s not so much about money as much as money is a part of the overall ideal of ‘trustworthiness’.
“Information that can reflect subjects' credit status includes information related to creditor rights and debts, and information such as on their performance in economic and social activities …; their compliance with administrative management and provisions related to public services; and on their performance of obligations provided by contracts, and pledges they made in accordance with law… Natural persons' citizen identification numbers are their uniform social credit codes.”
For local governments, this means enacting laws and regulations properly and honestly, strictly overseeing the credit status of procurers in the project performance and receipt stages of government projects, not defaulting on accounts for goods, projects, or services, enhancing budgetary restraints for local government debt, and increasing transparency.
Large companies “must not abuse their advantageous market position to conclude contracts containing unreasonable payment requirements or time limits, and must not breach contracts by defaulting on accounts for goods, projects, services”. Departments in charge of production sectors will “share product quality credit information across regions and departments, emphasizing foodstuffs, pharmaceuticals, daily consumer goods, agricultural products, and agricultural inputs.” And “departments in charge of the finance sector shall increase the force of punishments for financial fraud, malicious evasion of bank debts, insider trading, selling fake warranties, insurance benefit fraud, disclosing false information, illegal fundraising, obtaining foreign currency under false pretenses, telecommunication network fraud, and other related illegal and untrustworthy conduct, to regulate order in financial markets.”
When it comes to government and businesses, the focus is definitely on transparency within the realms of conduct and finances. Punishments also tend to focus on the fiduciary: “organizations and individuals may impose restrictions and restraints on credit information subjects with relatively poor credit in areas such as credit services, financing credit, bidding and tendering, and commercial cooperation.” However, one potential punishment does stand out: "Restrict exit from the country in accordance with laws and regulations.”
There is a glimpse into what potential violations could be on an individual level:
individuals that violate “public security, road traffic safety, immigration, and border crossings, and internet security”; “individuals that illegally provide telecommunications operations”; “resumé fraud, cheating on tests, examination fraud, academic misconduct… improper issuance of certificates, and improper internships”; “plagiarism, stealing work, forgery, alteration, buying and selling, and writing papers for others”; “trademark squatting and irregular patent applications”.
It’s scattered, but it is there.
The last few sections focus on how credit information of individuals and businesses will be handled, how to file complaints, legal responsibilities of enforcement agencies, and the rights of those being overseen. I have to say, these sections are even thinner on the details than I expected. The section on complaints, for example, tells you you have no right to ask about your score (except for twice a year), you can’t really complain about it, and if you do complain it’s not clear to whom you should complain, and even if they do receive your complaint, they’re well within their rights not to change anything, and if they do change something you will get a note saying it’s been changed. And that’s pretty much it.
But that’s enough focusing on the negatives, and on the boring law itself. When it gets down to it, what does a Social Credit System actually look like?
Creating a ‘social credit city’
There’s been some talk online that the West has overestimated the Social Credit system, exaggerating claims that the CCP is trying to create a Black Mirror-esque type mechanism of control and push China back to 1984. And it’s true that some people are overestimating the abilities of the bureaucracy-heavy Chinese government. However, while the new law doesn’t signal a change in direction or show that the system has been abused for widespread social control, it doesn’t mean that there isn't the potential for the long hand of the CCP to reach down into every corner of peoples’ lives, much like it did in the past.
What hasn’t been discussed much on either side is the very local nature the SCS is likely to take. This is mainly due to the employment of demonstration zones across the country, which have served as experimental testing grounds for different aspects of the SCS, including monitoring mechanisms, enforcement styles, incentives and punishments, and pace of development. All in all, these demonstration zones provide a glimpse into what is possible with a nationalised scheme, and for Western observers, it’s probably the best look into how it would most likely be rolled out across the country.
A good example would be Yubei, where the system of ‘spiritual incentives and material rewards’ (精神激励和物质奖励) has been established since 2016 when the Chongqing district was chosen as a demonstration zone. For citizens, “daily good deeds are quantified into points, and villagers get rewards based on points.” Assessment is based on the family as a unit, and a monthly review and announcement shows how different families have contributed to the community, either by helping out neighbours or doing something for the community as a whole. Rewards, it seems, are then dished out annually: one review per month, one announcement per month, and the accumulation is carried out annually. People can self-report for helping out neighbours, for example, rebuild post-flood damaged houses.
For businesses, the introduction of the SCS has made everything more ‘standardised and orderly’. The incentive scheme has encouraged “orderly behaviour, safe production, environmental protection, and payment of migrant workers' wages”, no bad thing. Interestingly, corporate entities are discussed in terms of those on a ‘blacklist’ and those on a ‘redlist’, deliberately communist language invoking images of the Cultural Revolution. For those on the blacklist we have much less detail, except that “restraint measures [are employed] to restrict untrustworthy enterprises from engaging in relevant business activities, enjoying financial subsidies, and participating in fiscal fund projects.”
At every turn, the positive aspects are mentioned first. Those who helped their neighbours rebuild their homes after a natural disaster received free food, drinks, and household products [I won’t ask where the government was in all this]. All good deeds are turned into points, points contribute to happiness, which in turn contributes to business optimisation, and the cultivation of integrity and administrative efficiency. Truly the embodiment of “doing nothing to disturb those who are honest and law-abiding” (对诚信守法者“无事不扰). Those who are dishonest and break the law? A simple warning: "the sword hangs high" (真正做到对违法失信者“利剑高悬”).
The idea that the SCS is just some sort of centralised credit score and not an overarching monitoring scheme that will be controlled directly by the party is, I’m afraid to say, completely absurd. Such claims have already been proved wrong by demonstration zones like Lishui, which upon being awarded the title, immediately set up a founding office to organise the work teams, which are to be comprised of workers from no less than 63 municipal departments and 9 counties, representing the party and government. The goal of this united front is to:
“overcome difficulties, and have the confidence and determination to win the battle, achieve success, to compete with 75 cities across the country and go all out to "take the exam". Quickly form a strong joint force to tackle difficulties, go all out to promote advantages… achieve new breakthroughs, and accelerate development” all in its race to become China’s “most trustworthy city”.
It’s interesting how many places have characterised the goal of creating a localised version of the SCS as a race or competition. The mayor of Hebi city “emphasised that the creation work has reached the sprint stage, with tight timelines, arduous tasks and heavy responsibilities. Departments at all levels must strengthen their confidence in winning… and start with the drive to sprint.” The SCS almost comes off as a big marketing enterprise: Come to our random 3rd tier city, the home of traditional food and trustworthiness! Who knows what the prize for the most trustworthy city is? The prize for the most trustworthy mayor, however, is probably a little more predictable.
Say what you will about the Black Mirror comparisons, but some demonstration zones have managed to link the social credit system to daily life. Ningbo, for example, has a system where people can get discounts at the market when their score reaches a certain value. It also intends to develop platforms whereby judicial enforcement can be directly linked to credit platforms, to create an automatic enforcement system. In Baoshan district, farmers in ‘creditworthy villages’ can take out loans more easily, and without needing a mortgage or a guarantor. Don’t forget that one of the main goals of the SCS is to “create a social atmosphere of integrity and compliance”, as well as a fairer business environment and good credit scores.
In almost all cases, the positive sides of the law are mentioned before the possible detractions, if the detractions are mentioned at all. Everything is about improving efficiency, making the economy more trustworthy and active, and allowing good people to prosper. There’s little mention of the lives of the people themselves, except in passing to say how they’re excited about the plan, or happy about a discount they received or loan they’ve been able to take out. Every report reads as impersonal, for what is supposed to be a very personal scheme that will potentially touch the lives of every single Chinese person. Not even farmers in remote villages without access to the internet will be outside of the system. There are always low tech methods employed for closer inspection, or to use on those savvy enough to dodge device monitoring. If there’s one thing you can never escape, it’s the prying eyes of a nosy neighbour.
It’s still at a local level, but it’s coming, and arriving fast if the reports are to be believed. If it’s not scary and manipulative, it should at least be understood for what it is: all-encompassing. For many, the two can be seen as one in the same.
National expansion
In a time when riots at Foxconn factories are being violently shut down, and China’s zero-covid policy is ramping up instead of cooling down as it is around the world, is speculation of a harsh and controlling Social Credit System so farfetched? The CCP already has ways and means of controlling speech - online and offline - disappearing dissidents, limiting people’s movements, and controlling how and where they spend and save their money. Even if the new law is dressed up as a ‘moral promotion’ scheme, it would be remiss of us to ignore the subtext - if the good people are rewarded, what happens to the bad people?
It will be interesting to see if any of the ‘opinions’ given by members of the public or groups like think tanks actually get published at any point. Although they’ll no doubt be the officially sanctioned viewpoints, it will still be valuable to see how other, non-governmental organisations have interpreted the law, especially academic groups who may have some more circumspect, less fawning views about the positive aspects of the law.
I would be curious to see if anyone links this social policy to other policy initiatives related to social control. For example, national security is a major challenge for China’s development, and is often discussed as being in reference to Xinjiang and Taiwan. However, for China’s leaders national security refers to every citizen at every level of society, and requires the regulation of every aspect of their person, from their deeds to their thoughts.
“political security involves the stability of national sovereignty, political power, systems, and ideology; is the most fundamental need of a country and is the basic condition for the survival and development of all countries.” - Why is political security the foundation of national security? From People’s Daily
So far, all the national coverage seems very positive about making what are usually seen as intangible qualities - honesty, integrity, trustworthiness, kindness - recognisable and measurable. These metrics have all been neatly summarised and packaged with a new, overarching term: ‘creditworthiness’. There seems to be little concern for the philosophical aspect of this law, namely, if one has to be incentivised to be a good citizen, is one truly a good citizen? What is the basis for one’s morality? Would you still help your neighbour if you didn’t get a free washing-up liquid voucher for it?
China’s government is all about achieving results. They want to go as far as possible as quickly as they can, and as we’ve seen, they often have little regard for how they get there.
Sometimes, the results are marvellous. Megacities, high-speed rail, poverty reduction are all undeniably grand results of a country on a mission. But they all came at a price: workers’ rights, environmental damage, ethnic identity, youthful aspiration. The individual hopes and dreams of the Chinese people are often brushed to the side in order to raise the nation to new heights. These often unforeseen consequences then leave the government and party scrambling to react, but these responses are often heavy-handed or met with resistance.
All this begs the question: what will be the consequences of China’s rush to become a virtuous society?
Fascinating. We do the same in the States. We just call it "snooping" or "being a busy body".
Social media has become a fertile ground for such as introduced in China now. Luckily, the "God, Guns, and Glory" folks that reside in, say, Texas, also have that streak of, as the song says, "Mind your own business and you won't be minding mine".
Sadly unappreciated by the politicians there now.
What a drain on the productivity of a nation to have such a social credit system!
Oceania has always been our enemy. Oceania has never been our enemy.
When do they put in the telescreens?