Bad Credit

Chinese governance gets too much ‘social credit’

Author: Vincent Brussee, MERICS

Although China’s central leadership sees its social credit system as a key part of the country’s national governance system, implementing the initiative continues to be a headache. The system has successfully helped curb fraudulent behavior by citizens and businesses, but has also created space for misuse and abuse. A look beyond Western headlines about a technological dystopia reveals that the system continues to challenge its inventors in Beijing.

This year marks the 20th anniversary of the social credit system. Its birthday is a good opportunity to remind the world that it is more a glorified online file system than the mass surveillance system it is commonly known. (mis)represented as being. A political umbrella rather than an integrated whole, its most important goal was to suppress abusive practices in China’s market economy and improve trust among economic actors. Continuing a long-standing political tradition in China, the authorities framed these issues in sanctimonious terms, demanding a paternalistic response.

Fraud and other forms of misconduct left ‘the public extremely dissatisfied’, says then-Premier Wen Jiabao Noted in 2011. The Social Credit System was designed to take a two-pronged approach to solving the problem. Its carrots and sticks became the well-known instruments of the system – rewarding those who faithfully followed laws and regulations (recorded on so-called “red lists”) and penalized those who behaved fraudulently (recorded on black lists). These lists are always administered by humans and do not involve any complex notation.

The blacklists target a small portion of serious wrongdoers – but given the size of China’s population, this involves millions of people. The Supreme People’s Court’s blacklist for people who do not obey court orders includes nearly 7.2 million citizens from March 2022. Until 2019, this blacklist almost banned people from buying plane tickets 21 million times.

The National Development and Reform Commission, one of the agencies in charge of the social credit system, said in 2019 that the system had ‘achieved remarkable results‘ after ‘adverse credit events’ were 22.7% lower in 2018 than in the prior year. The proportion of sanctioned companies decreases from 1.31% in 2018 to 1.1% in 2019, proof in the eyes of the authorities that professional misconduct was decline. Major market scandals – like the 2008 adulterated milk scandal – seemed like a thing of the past for most Chinese.

These trends were also the result of broader legal and regulatory reforms, but the social credit system still enjoyed public support in China. During the COVID-19 pandemic, citizens using Weibo social media platform massively supported blacklisted ads of people who had broken COVID-19 rules. Surveys have shown that up to 80 percent of citizens approve of the system. Although this high approval rating is partly due to the fact that the state active propagandathe social credit system has strong support.

The social credit system is used as a tool to help enforce all Chinese laws, including the most authoritative ones. Local and regional authorities can also use it to achieve political goals. Rules for blacklisting internet users for spreading “fake news” was never officially adopted, but citizens were sanctioned for online comments. In early 2020, Anqing City blacklisted two citizens for “spreading rumors” about alleged COVID-19 cases. Zhejiang Province has awarded companies for supporting causes such as the “common prosperity” of the Chinese Communist Party.

Without a legal definition of “social credit,” there were very few limits on the type of behavior that could or could not be included under its umbrella. Some local and regional governments have used the social credit system to penalize citizens for minor offenses like improperly sorting their trash, eating on the subway, or jaywalking. Others use it to impose political control, for example by prohibiting citizens from ‘irregular petition‘ In Beijing.

But this free rein has created headaches for China’s central leadership. It has at times drawn strong criticism from scholars like Shen Kui, a professor at Peking University in China, who has called the social credit system a chaotic, prone to abuse and at risk to human rights in 2019. Citizens also expressed concerns about ‘disciplinary overworkI’.

The system has become fragmented, hampering the implementation of shared data systems and unified national regulation. The main objectives of the system were defined eight years ago in the Overview of planning 2014-2020 – but they remain unsatisfied to this day. Blacklists have proven to be easy to’Game‘ in favor of companies.

Although the central government initially encouraged local authorities to experiment with the social credit system, it has recently concluded that these practices have gone too far. Since 2019, new regulations have restricts the use of notationprohibits the inclusion of certain behavioral information in the system, and clarified that “unreliability” primarily refers to failure to comply with laws, regulations and formal contractual obligations.

The third decade of the social credit system promises to be complicated. The central government is finally trying to standardize standards and procedures, while leaving some room for local adaptation and recognizing the elements of the system that have been success. Local authorities will try to continue using the system to achieve their own policy goals. The future of the social credit system now faces a period of negotiation between a central government pushing for standardization and millions of executives with local, even personal agendas.

Beijing’s headaches are unlikely to go away anytime soon.

Vincent Brussee is a Aanalyst at the Mercator Institute for China Studies (MERICS) in Berlin.