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China’s personal social credit scoring has sparked controversy, but many in China appear willing to accept it. Lavender Au and Mats Kuuskemaa ask how far this acceptance goes. This article is part 4 of a mini-series to present the outcomes of the MERICS European China Talent Program 2019.

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From an outsiders’ perspective, China’s fast-developing concept of personal social credit rating seems outlandish. It was quickly dubbed a real-life ‘Black Mirror’ or ‘Orwellian dystopia’ by international media.

But, to date, social credit initiatives seem to have met with little opposition in China, in spite of apparent intrusion into people’s private lives. From Chinese bureaucrats’ perspective, social credit systems are a collection of efforts to deal with lack of integrity in society and problems that ordinary Chinese people face every day. Various municipal and state-level schemes target not only citizens and enterprises, but also government officials themselves.

So how advanced is China in implementing personal social credit systems? Although the concept of social credit was first introduced in 2001, a properly functioning national system is still many years away. Social credit isn’t even on the radar of many people. A SCMP reporter went to Yangqiao village in Zhejiang province and found that even when local government has made a point of rolling out an individual rating system, villagers do not bother to check their scores. Daum (2019) argues that “even the most prominent [municipal] point systems have so little impact on employment, education, and daily life that most citizens remain totally unaware of them.”

An acceptable trade-off between security and privacy?

Nevertheless, social credit systems require the collection of large quantities of personal data. Does the apparent acceptance of these systems suggest that Chinese people place less value on data privacy? The public outcry last year directed at tech industry giant Alibaba for misleading users into sharing data with third parties suggests otherwise. It is not true that consumers do not care about privacy, but that many are willing to accept a trade-off if it ensures the security of the food they eat and the products they buy, and that those who owe them money pay them back.

From the inside, Chinese society doesn’t feel overly controlled – it often feels chaotic. Consumers in China are bombarded by spam calls. They fall for financial scams mixed in with legitimate online investment opportunities. They take their children to be vaccinated and later find out that one of the largest providers was peddling ineffective jabs. They bring cases against debtors in court, but even if the judgment goes in their favor, lack of actual redress means that court orders are often dead letters.

Hundreds of people turned up in Beijing to protest against Ponzi schemes, suggesting that people expect their government to do more about fraud. Willingness to accept social credit was confirmed by Kostka (2018) survey estimating 80 percent support for social credit implementation amongst Chinese citizens interviewed, with most favoring central, not local government to spearhead implementation. The study also found extra-high support amongst the wealthy, suggesting that have-nots may have less faith that schemes will benefit them.

On the other hand, hoarding of public data creates entirely new risks. Local governments are regularly found leaving citizens’ personal information exposed. Yet another unsecured server was discovered in July with 60 million personal records. Who was responsible? Jiangsu provincial police had left the server without a password to protect it.

There are also concerns that criteria used in creating blacklists or scores may be expanded to cover anything that the authorities see as unhelpful. In April for example, it emerged that officials in Zhejiang province were considering penalizing credit scores of workers who changed jobs too often.

Last year, a story about a student barred from university because of her father’s debts, despite scoring 710 in college entrance exams made the rounds. State media outlets dismissed it as fake news, but the traction it gained further demonstrates public dilemma about social credit.

Traffic violations – a key point of disagreement

In July 2019, Nanjing’s traffic police kicked off a social credit scheme targeted at those violating traffic rules. At main intersections, facial recognition was used to identify rule breakers. The violations were broadcast on large screens and the violators themselves were sent alerts ordering them to attend traffic safety sessions. From 2020, unpaid parking bills are to affect Beijingers through the municipal social credit scheme.

Inclusion of traffic violations into social credit schemes continues to fuel heated discussions in China. Many are tired of others driving on the wrong side of the road, yet some find a fix by social credit too intrusive. Even an online state media poll by People’s Daily Online resulted with 61,000 favorable and 21,000 votes against. Regardless of the source, the poll reflects discord on this topic among the Chinese populace.

Municipal and all-China schemes are in different stages of development, a reason why personal social credit schemes’ impact on people’s everyday lives has been limited thus far. While twenty-three million people were barred from purchasing train and plane tickets in March, this had little effect amongst 1.4 billion. A recent EUCCC survey, on the other hand, argued that consequences on China’s business environment from the enterprise social credit scheme to be implemented next year may be far more significant. In particular, foreign enterprises’ social credit may be weaponized during trade or other disputes, while making corporate leadership personally liable for poor scores gives authorities further sway to demand loyalty and affect corporate decision-making.

Social credit is likely to continue to spark heated arguments amongst China-watchers for many years to come. Some warn of the potential for abuse by those in power. Others stress that credit schemes also address legitimate policy concerns. It is however abundantly clear that the systems are likely to advance. Various central ministries have released top-level documents, and local-level regulations related to social credit already number in the hundreds. Thus far, it appears that many amongst the Chinese populace support the concept and its implementation.

About the authors:

Lavender Au is a Lead Analyst specializing in governance and law at the Beijing-based research and strategic advisory firm China Policy.

Mats Kuuskemaa is Political Counsellor at the Embassy of Estonia in Beijing.

The authors participated in the fifth annual MERICS European China Talent Program in May 2019, during which parts of the argumentation presented in this blogpost were developed. The authors bear sole responsibility for the content.