Credible Threat? Taiwan, websites, and social credit

【Updated 7/3/2018 – Modification to endnotes for clarity and a TLDR summary now available here】

A number of people have asked me recently how Social Credit relates to Chinese authorities’ demands that foreign websites list Taiwan as part of China. I suspect that these queries will pick up following an article by Dr. Samantha Hoffman who uses those demands as a launching pad for discussion of Social Credit as a tool for increasing Party influence beyond China’s borders. I’m a little at a loss when answering these questions or reading such articles because I don’t think this situation has all that much to do with social credit.

The Civil Aviation Administration of China’s (CAAC) letters to airlines do contain the following language regarding social credit in their final paragraph:

“If the changes [listed above] are not made in the time provided, our bureau will follow the laws and regulations to take further measures, including placing your company on the record of serious untrustworthy conduct in accordance with article 8(11) of the “Civil Aviation Industry Credit Management Measures (Provisional)” and punishing your company in accordance with Chapter III of those measures, and concurrently submit your company’s violations of Chinese law to the State Internet Information Office and other law enforcement departments to take administrative penalty measures in accordance with law.”[i]

Notice that the companies are not accused of ‘violating’ the “Civil Aviation Industry Credit Management Measures. The credit measures are an enforcement mechanism for an underlying offense and inclusion on the blacklist is one of the potential consequences mentioned if the demands are not complied with. These credit management measures don’t create new obligations for the companies, but enforce existing laws. I am yet to see any social credit documents authorizing punishments for conduct that was not already illegal.

The underlying laws or regulations requiring the website changes aren’t specified in the letter, but there is legal authority forbidding the transmission of maps that show Taiwan as a separate nation etc. For example, Article 55 of the “Map Management Regulations” （地图管理条例）authorizes fines up to 100,000 RMB (about $15,000 US) for including such maps online, and such acts might even be viewed as spreading content that encourages separatism or threatens the territorial integrity of the nation which can have more serious penalties.

Article 8 of the CAAC credit measures, referenced in the letters, lists the 15 types of conduct that can get you put on the blacklist. Most of the items involve safety concerns, like the discovery of an especially serious safety inspection problem (4) operating an airline without a license (5) refusing to fix problems after an accident that was caused by transport of hazardous materials (6) being entered on the blacklist for workplace safety problems (1) etc. The ground relied upon in the letter, 8(11), is for refusal to act as required by an official decision issued by the CAAC despite being able to do so. Basically, this means you can get on the list for willfully refusing to do what the regulatory authority lawfully orders you do.

Note also, that the letter isn’t threatening to include the violation in some generalized credit score or record, but in the CAAC’s industry-specific list of serious violators. This is typical of how social credit mechanisms work overall; each regulatory agency has been asked to create guidelines for what violations merit listing in their blacklists or a less severe grey list. The blacklists are made public, and also shared and retained in a centralized credit platform for a fixed period.  Inclusion on these lists generally invokes only industry-specific penalties, meaning those penalties that the agency responsible for the blacklist can directly impose, and related to their area of regulation. In some situations, Memorandums of Cooperation between agencies have been signed so that a different agency will use its authority to take action against certain persons blacklisted by the original agency. This kind of joint disciplinary action tends to be coercive rather than punitive, meaning its goal is to compel a certain action, like paying off a fine, and ends when performance is completed.

The consequences for being on the CAAC blacklist include an increase in the frequency of routine inspections (remember, under article 8 it is mainly safety violations that would get you on the list). The measures also provide that any administrative punishment given should be at the harsh end of what is allowed by existing administrative regulations. (article 18) Administrative punishments can be quite serious, including loss of business licenses, but they predate Social Credit and aren’t a consequence of it.  Chapter III of the CAAC credit measures provides additional consequences for being on the CAAC blacklist, as suggested in the letter. These include increasing the difficulty of getting permits or resources, notifying the industry association for further censure, depriving subjects of certain facilitation support, etc.

What’s wrong with calling it social credit?

I think China’s social credit system fascinates people because they envision nebulous ‘big-data analytic techniques’ and ‘real-time data collection’  mobilized to rate and control citizen behavior. [ii]  The reality in the airline case and most of social credit is much more straightforward: the threat of consequences to correct a specific and potentially ongoing violation.

Social Credit is less a single system than a network of authority, tied together by the common idea of keeping records that might be useful to assess trustworthiness or reliability and closely linking these to individuals and organizations. There are portions of Social Credit that relate to consumer credit (whether a person can repay loans), there are portions that consider government transparency, and most importantly for the airlines here, there are portions that enforce existing laws and legal obligations. Enforcing laws is generally a good thing, but if those legal obligations are frivolous, unjust, or irrational- social credit might make thing worse by enforcing those bad laws.

The scope of big-data algorithmic analysis in social credit today is low, although technological advances make increasing government use of data a global concern. Social Credit does already contain a ‘Big Data Warning List’ that integrates some of the industry-specific grey list data; specifically, any person or entity that appears on three or more different industry grey lists  must be listed be listed on the big data list as a potential risk. The key number in this ‘big’ data is 3 and the analytic formula is straight up addition.

Extraterritorial Reach?

Use of domestic and regional law to influence international corporations’ online conduct isn’t new to China or social credit; and I have an inbox full of privacy policy update notices to prove it. Making law requiring websites to list Taiwan as part of China is a blunt and aggressive way of asserting Chinese policy views. The most obvious response would be for airlines to create a special website for Chinese traffic that identifies Taiwan as required by law, while letting the rest of the world view the original version. This seems the sort of solution that has worked in response to other regions’ burdensome online content regulations, like Quebec’s French language laws, where some companies have also chosen to simply stop offering online services to customers.

Dr. Hoffman cites a mention of the CAAC credit measures buried in a government released light news piece as indicating an intention for the social credit system to target ethnic Chinese persons outside of China. [iii]That article lists a wide range of new legal authority taking effect in 2018, not only in China, but also in other countries such as Korea, Singapore, and the U.S., that might be of interest to its readers.  I don’t see a reason to consider this a warning to overseas Chinese that these laws apply to them in any special way. China does seem to apply its laws differently to ethnic Chinese, or former citizens, but it does so in selective enforcement (consider the cases of Stern Hu or Gui Minhai to name a few) a criticism we can make without mentioning social credit.

It had honestly never occurred to me that the social credit system wouldn’t apply to all foreigners in China, like most Chinese laws and regulations. Foreign organizations with representative offices do have a uniform credit number (here’s United Airline’s), but keeping data and imposing restrictions might be harder for individuals who don’t have a national ID card. Real name systems for phone numbers and bank account registration rules definitely apply today, using passport and visa numbers. Foreigners who default on court judgments have been prevented from leaving the country, and the search function for the court judgment defaulter blacklist already includes options for searching within the ‘exceptional’ regions of Hong Kong, Macao, and Taiwan, suggesting they at least can already be listed.

Does any of this matter?

I like to think correctly understanding social credit is important. It matters because there are real concerns about Chinese influence, and Chinese human rights issues, that need to be correctly understood to be addressed.  It is also important because we are still debating our use of data at home, and if we hope to learn from others experience we need to understand it.

[i] “如逾期未改,我局将依法依规采取进一步措施，包括依据《民航行业信用管理办法（试行）》第八条（ 十一）项的规定将你公司记入严重失信行为记录并依据该办法第三章对你公司依法实施惩戒，同时将你公司违反中国法律的情况转交国家网信办等执法部门依法采取行政处罚措施。” [Translation in article mine]

[ii] See e.g. Hoffman, Samantha, “Social Credit” @ https://www.aspi.org.au/report/social-credit  China’s ‘social credit system’ (SCS)—the use of big-data collection and analysis to monitor, shape and rate behaviour via economic and social processes¹—doesn’t stop at China’s borders.  “Social credit requires real-time monitoring through big-data tools that can inform decision-making and the implementation of the credit system. “

[iii] Hoffman, Sentence proceeding citation 16.