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Giving credit

[This article was written in the earliest days of my social credit research, and while my understanding of social credit has become more nuanced as the system has developed, it remains a useful insight. It has since become clear, that the ‘rankings’ assigned in social credit are better understood as records of violations of laws and legal obligations, rather than any sort of meta-analysis]

China’s evolving ‘social credit’ system captures people’s imaginations. The idea of a monolithic data platform being used to judge us all resonates beautifully with rising anxieties about government collection of metadata, increasingly spot-on targeted advertising, and other horrors lurking in the enormous sea of data we store online. So, when China – justifiably associated with political, media, and social controls – reveals that it is aggregating information on ‘creditworthiness’ that will be used to assign rankings to all businesses, individuals, and other entities— it’s hard to blame folks for getting a little ahead of themselves.

Unfortunately, despite how close to home the issues involved are, many outside of China seem to view the story as uniquely Chinese — social credit as a wacky dystopian daydream from a faraway land. Parts of the system may be distinctly Chinese, but the system ultimately reflects China’s grappling with issues faced globally: how to positively utilize new information technology, the need for reliable economic data, and how personal privacy can best be sustained in all this. “Social Credit” is a Chinese formulation, but pieces of the system have been proposed elsewhere in one form or another for some time; and how each nation addresses these complex questions will be very revealing about the core values of that nations.

The consideration of China’s system can’t end with “China Bad”- which is an easy and common enough story – but should stimulate a discussion about how our laws and cultural norms struggle to keep pace with a changing information landscape, and if “Social Credit Bad”, how do other societies do better. These are not questions about the future, but are very much before us now.

One reason the foreign media has maintained this distanced perspective is the lack of detailed information on the implementation of China’s system; although this is slowly changing. Recently, the first document specifically addressing how the system might be applied to all individuals was released, and it gives us a good deal of insight into what ‘social credit’ might actually mean in the broader sense, and an opportunity to reflect on recurring themes in the growing body of authority. China’s social credit system may become one of the largest concerted efforts to harness individuals’ data, and watching it, and understanding it, is a prerequisite to learning from it.

  1. No anonymity (from the State). Over the last several years, China has slowly been phasing in “real-name systems”, requiring that every phone number, internet connection, bank account, and so forth, be attached to a verified national identification number. This ensures that all use of mobile networks, internet, financial accounts, post, and travel is traceable and associated with a specific individual who bears responsibility. Real name systems also include limits on the number of cell phone numbers a person might easily register in their name, fines for leasing or selling bank accounts to third parties, and other measures to ensure that the information is on file leads to the correct person.

Under real-name systems, consumers are generally still welcome to invent screen-names visible to other users, but , behind the scenes, website administrators and service providers must confirm which actual person is associated with which account, so that they can be located and held responsible for any violations; and service providers can be held responsible themselves for failure to collect the information.

This kind of transparency may well reduce fraud and help stop criminal acts, but it will also have a chilling effect on the voicing of unpopular opinions and political discourse – especially in light of increasingly harsh penalties for spreading rumors or causing unrest online.

The new document makes clear that the real-name trend is an essential part of the social credit system, and also encourages expanding the system for registering fingerprints on national ID cards as well. The goal is to have distinguishing identity information associated with more and more activities, and that nobody can escape the consequences of their actions.

  1. Broad Understanding of Credit. The vocabulary of the system is confusing, especially in translation, but the idea is not. Whether it’s called creditworthiness, integrity, or truthfulness (诚信, 守信), it is clear that the social credit system is meant to encompass something beyond one’s ability to pay back loans. It is a judgment of moral character- of the ability to keep promises and fulfill legal commitments. For example, the new document includes adult students’ cheating on tests or academic fraud, as factors that would impact credit ratings.

The idea is about changing people’s conduct by ensuring they are closely associated with it.

Of course, as large numbers of Chinese who have no credit history whatsoever seek to take out loans, one function of the social credit system is still to provide some basis on which lenders can consider their risk level, an idea that is not unique to China. Much early English language coverage seized on the private credit reporting systems being developed in China, that attempt to create such a credit report of sorts based on purchasing histories and social contacts, which are part of China’s steps towards a credit culture, but are not the same as the social credit system.

The new document provides that the government will release codes of conduct for citizen creditworthiness, which will detail more fully the standards against which citizens will be measured.

The use of ‘citizen’ here is new, and it is unclear if foreigners are held to a separate standard; although real-name registration systems and the like have certainly applied to all consumers as does a rating system for foreigners’ talent contributions.

  1. Development through Targeted Application. In addition to the major roadmap documents, the social credit system has been slowly building in the subtext of a wide number of regulatory documents in many fields. While these documents say little about the social credit system directly, they often contain a seeming throw-away clause noting that certain information should be included in a person or entity’s social credit file. There have also been a number of industry-specific ‘blacklists’, created, restricting serious offenders from engaging in related fields—mainly in industries that already require some form of regulatory approval or professional credential.

The new document provides a non-exclusive list of industries and professions that should be targeted for early application of social credit measures. Industry associations are encouraged to begin their own credit archives of membership, which can ultimately be shared on uniform platforms.

IndustriesFood and drug, production safety, fire safety, traffic safety, environmental protection, biological security, product quality, tax collection, health care, labor security, engineering and construction, financial services, intellectual property rights, judicial proceedings, e-commerce, and volunteer service
Professionsofficials, legal representatives and the relevant responsible persons for enterprises, lawyers, teachers, doctors, practicing pharmacists, appraisers, tax accountants, registered fire safety engineers, accountant audit personnel, real estate agents, certified personnel, financial professionals, and tour guides

  1. Long arm of enforcement. Another recurring theme of the emerging social credit system is that the credit score should have far-reaching consequences, including both rewards and punishments. The idea is that creditworthiness, something larger than traditional credit, is not compartmentalized, and that the untrustworthy should be treated as such in all aspects of life. In practice this will mean making data available on centralized platforms, creating differentiated administrative treatment based on good and bad credit, and encouraging the broader society to rely on credit information in interpersonal dealings.

One of the first parts of the social credit system to become fully effective shows just how far-reaching the consequences of bad credit can be in a more centralized government like China’s. The Chinese courts, with the support of 43 other central government institutions, have already created a ‘judgment defaulters blacklist’ that is publicly searchable and limits a wide range of consumer activities for those who fail to perform on valid court judgments against them. These include limitations and restrictions on high-cost items such as hotels, sending children to private schools, flying on airplanes, purchasing property and much more; until the judgment is performed upon. Court judgments are usually financial awards, which explains the emphasis on limiting spending until the debt is paid, but those who fail to perform on non-financial judgments are equally subject to the restrictions

Again, these restrictions apply only to those who already have a valid judgment against them and have failed to perform on that judgment. These are enforcement measures regarding outstanding obligations, rather than general consequences of being labeled “untrustworthy” , but they are expressly part of the credit system, and demonstrate how quickly a wide a range of penalties can be mobilized against a person .

The new document reiterates that ‘green channels’ should be created for those with good credit, to reduce administrative burdens and give support in areas such as employment, education, and entrepreneurship. Conversely, those with bad credit should be subject to heightened scrutiny. The document also encourages the development of market and social constraints and penalties for those with bad credit, by encouraging private entities to enforce their own differential treatment relying on publicly available credit information.

  1. Personal Responsibility: While this new document is the first to specifically address personal creditworthiness for individuals, accountability reaching ‘down to the individual’ has been a persistent theme. Government officials, corporate executives, or ordinary citizens, are all to be held personally responsible for their own untrustworthy acts, and those of entities over which they had control. In a document about rewards and punishments in the social credit system, both entities and the people in charge are held responsible for serious untrustworthy conduct.
  1. Protection of Privacy: While individual privacy concerns are acknowledged, this is generally with respect to information improperly reaching other non-state actors. The scope of governmental authority to view and maintain records is to be limited by laws and regulations that are only just being drafted.
  1. Restoration of Credit: As with privacy protections, it is good to see this concern raised, but details are still a bit thin. The new document mentions time limits for the use of certain types of information without offering specifics, although it is unclear if the information will still all be retained somewhere as part of a permanent record. It also mentions paths to challenge designations such as through administrative reconsideration procedures.

Some means by which the impact of credit breach can be reduced and how bad credit might be repaired are also presented, with the latter including performing volunteer services and making charitable donations. This does invoke a sort of Karmic accounting, but might end up being something more akin to the purchase of ‘indulgences’ .

Minimizing Negative Credit impactRepairing Credit
· Performing on obligations· Regularly performing obligations on time
· Applying for extensions· Volunteer service
· Offering explanations· Charitable donations

From this brief overview and a consideration of the relevant documents, you can see that China’s social credit system is very much a work in progress but moving forward quickly. You can also see that it reflects deliberate and unapologetic choices about how data should be used and protected. The government wants to mobilize data to facilitate the transition from a cash to electronic and credit economy, to prevent pervasive fraud and ‘disruption of social order’, and generally make everyone behave well or be shamed. Specifics will continue to be refined in future laws and regulations, but the overall direction of the balance between privacy and discovery of misconduct is already clear.

China may be able to more fully consolidate and act on it, but the data involved in Social Credit exists everywhere. Choices on its use are being made- by governments, by corporations, by consumers- both actively and through passive evolution. In watching China’s grand experiment unfold, we need to start not just assessing their system, but asking what our own use of data says about our priorities and values.

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Jeremy Daum is a Senior Fellow of the Yale Law School Paul Tsai China Center, based in Beijing, with over a decade of experience working in China on collaborative legal reform projects. His principal research focus is criminal procedure law, with a particular emphasis on protections of vulnerable populations such as juveniles and the mentally ill in the criminal justice system, and is also an authority on China’s ‘Social Credit System’. Jeremy has spoken about these issues at universities throughout China and in the U.S.; and has co-authored a book on U.S. Capital Punishment Jurisprudence for Chinese readers. He is also the founder and contributing editor of the collaborative translation and commentary site, dedicated to improving mutual understanding between legal professionals in China and abroad.
He translates, writes, edits, does web-design, graphic design, billing, tech support, and social media outreach for China Law Translate.


  1. Andreas Källström Andreas Källström 2021/04/12

    Very interesting and informative! Thank you!

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