The future development of China’s emerging Social Credit System has been the subject of much speculation, but has already had tangible consequences for millions of people blacklisted from spending on luxury goods, travel, and education. Notable past cases include those of journalist Liu Hu, lawyer Li Xialin, and tech mogul Jia Yueting. At Buzzfeed, Megha Rajagopalan and William Yang describe another recent case of social credit blacklisting that grabbed widespread attention, stirring up mixed reactions and evoking comparisons with imperial-era collective punishment.
According to state media reports, a high school student with the surname Rao in the eastern city of Wenzhou, China, was accepted on the back of his score in China’s fiendishly difficult and incredibly competitive national college entrance exam.
But before his family could enjoy Rao’s accomplishments, the college notified them that he may not be able to attend because of his father’s poor credit standing — the father owed 200,000 RMB (about $30,000) to a local bank, and had been put on a blacklist dubbed the “lost trust list” for individuals with bad social standing, state media reported.
[…] The story of Rao and his father has spread across China. Local news outlets in Chinese province Zhejiang first reported the story last week, and state broadcaster China Central Television (CCTV) picked it up the following day. The official People’s Daily published an opinion piece on its website that was critical of the college’s decision.
“Enrolling in prominent universities isn’t based on the wealth of one’s family, it depends more on hard work and efforts,” the article said. “Directly limiting their chances from being admitted to prominent universities is a breach of these students’ rights to receive education.” [Source]
Uneven access to education has been an increasingly sensitive subject in China. This year, the Ministry of Education ordered a halt to the usual focus on the gaokao college entrance exams’ top scorers, whose achievements are often buoyed by privileged backgrounds.
In this case, the blacklisting apparently worked as intended, spurring Rao the elder to pay off his debt so that his son could take up his university place. What’s On Weibo’s Manya Koetse summed up polarized responses on social media:
One Weibo news thread on the issue received nearly 30,000 comments.
One of the most popular remarks on the story said: “If it is okay to treat those who are associated with an offender as guilty (连坐), then it’s time to punish the sons and daughters of corrupt officials, too.”
“A father’s bad credit has nothing to do with the children!”, another Weibo user said.
But another popular comment called the measure “effective,” with others agreeing: “If he waited two years to pay off his debt, he was basically asking to be on the blacklist. That his bad credit influences his child’s education is just to reap what one has sown.”
[…] Another person on Weibo says: “The people who are saying the child is the victim here should also know that people who end up on the blacklist are generally not people without money, their kids have enough opportunities, it’s just that if they owe money [to the bank], paying the tuition fee for their kids would become a problem.” [Source]
Jeremy Daum from Yale Law School and China Law Translate, who has been a close and critical observer of social credit and Western coverage of it, scrutinized the case on Twitter, noting that there are “so many strange things in this story.” He concluded that the incident is real, that the unnamed school was a private one, and that it therefore appeared “that the restriction on judgment defaulters’ children attending private schools was the issue.”
The lack of reliable and complete information here about this application of a system designed to promote trust and honest is a brutal reminder of the credibility gap China faces.
— China Law Translate (@ChinaLawTransl8) July 16, 2018
Daum focused on the blacklists (and “redlists”) in a blog post in March.
Another close observer of social credit is the University of Leiden’s Rogier Creemers, who examined the emerging system, its goals, and its historical context, in a recent paper and Twitter thread. Creemers covered much of the same ground in a recent talk at SMC050, focusing from 18:30 on the blacklist “ecosystem” as “essentially what the social credit system in China looks like at the moment”:
What do we mean with a blacklist system? It’s very simple. There’s no data or no technology involved. This is not AI-driven, deep learning, algorithmic decision-making. It’s very simple: you’re on a blacklist, or you’re off a blacklist. If you’re off the blacklist, fine, have a nice day; if you’re on a blacklist, we need to talk. And there is not one blacklist, there are hundreds. Every major policy area has its own blacklist, so there’s a blacklist for civil aviation—for people who misbehave on planes. There is a blacklist for production safety, for companies that play fast and loose with workplace safety regulations. Some of them belong to one ministry, but most of them are topical blacklists run together by a couple of ministries. The biggest one, and the most irritating one if you have the misfortune of being on it, is the blacklist of the Supreme People’s Court, and that is the blacklist for, literally translated, “Untrustworthy People Subject to Enforcement.”
What do we mean by that? If you break a law or regulation—and there’s a document, a very long document that spells out exactly which infractions fall under this system—but if you break one of the rules mentioned in that document, and you are convicted for it, and you refuse to carry out your conviction—you don’t pay your fine, you don’t carry out your injunction, you don’t pay back your debt or your loan—then you get on that list. And then all kinds of things happen. All kinds of doors close. You can’t become a corporate director anymore. You can’t participate in government procurement programs—tendering and bidding processes—anymore. You can’t fly in aircraft anymore. You can’t travel first class on trains anymore. You can’t spend money, in fact, on luxury products in Tmall anymore—this is a public/private partnership. You can’t stay in luxury hotels anymore. The idea being that if you don’t have the money to pay back your fines or your debts, then certainly you shouldn’t be spending it on luxury watches and poncy hotels either.
And so this is essentially what the social credit system in China looks like at the moment: an ecosystem of lists maintained by ministries and groups thereof at the national level, and maintained by city governments at the local level. And the city lists are really the fun ones, because you sort of notice that they’ve been drafted by civil servants who really were thinking only about their problem and not quite about PR. So there are a couple of cities that have facial recognition cameras, and if you walk through the red light too many times then you also get put on the blacklist. And that’s the sort of thing that Western media love writing about. But in essence that is, from the government perspective, what the social credit system looks like today. [Source]
More details on the blacklists can be found in a new paper on the Social Credit System by Martin Chorzempa, Paul Triolo, and Samm Sacks for the Peterson Institute for International Economics, in which they note that “enthusiasm for enforcing SCS blacklists has already led to excessive punishments.”
Two early SCS components—the court judgment blacklist and the social credit in transportation—have received the most attention because of their steep, visible penalties. These records share only negative information, functioning more like criminal records in the United States. The court judgement blacklist was created when China’s court system launched an online platform in 2013, which publicly names those who refuse to comply with court judgments and subjects them to “credit punishments.” The extent of noncompliance with court judgments shows why a system like social credit is needed. Inability to enforce judgments eroded the credibility of courts and the law, as defaulted debtors or convicted swindlers continued to open new businesses, get loans, and use assets they by law should have forfeited. But because China lacks an independent judiciary and the system has been rolled out hastily, this system can also harm individuals.
The court blacklist integrated with databases at the securities regulator, central bank, and company registry to block blacklisted individuals from issuing securities or borrowing money, incentivizing them to comply with the court and get off the blacklist. The court also worked with banks to facilitate asset freezes and fund deductions from bank accounts (Leung 2014). Its effect was to create a system similar to that of the United States, where courts and law enforcement officers can seize assets or skim off wages to force compliance with a civil judgment. But soon after, the punishment mechanism was expanded to include a controversial ban on air and high speed rail travel or stays in luxury hotels, which had hit 6.7 million people by early 2017. While travel restrictions may be draconian measures for defaults, they are not unique to China. Millions of Americans have also had their driver’s licenses revoked due to unpaid traffic fines (Salas and Ciolfi 2017). China’s pilot has shown both positive examples of individuals settling long outstanding debts and crackdowns on firms that take advantage of vulnerable workers by not paying wages (Dai 2018) and worrying examples of judgments hitting journalists and defense lawyers. [Source]
The paper also examines some of the more dystopian political angles that have been the focus of most Western media coverage:
One area of concern is the social credit system’s implications for freedom of speech, for example, if a critical comment about the government would lower one’s social credit score (if such a score indeed becomes part of the SCS). In fact, internet sites with commentary features are supposed to keep blacklists of those making “illegal” statements on their websites, which could be integrated into the SCS (Cyberspace Administration of China 2017). However, this concern goes beyond social credit. Even without it, the Communist Party has a wide array of tools to restrict speech, from automated censorship to arrests simply for irreverence on sensitive historical topics even in private group chats. The risk of SCS use to repress speech must be taken seriously, but social credit would only be one tool in this larger domestic security apparatus. These issues are beyond the scope of this Policy Brief but are critical to what the social credit system will become. [Source]
Creemers similarly noted in his own paper that “put bluntly, on the tough issues, ranging from Uyghur separatism to subversion, the Chinese government has other, much more targeted and scary tools at its disposal.” The four authors’ agreement extends to Western fascination with social credit, which Creemers suggests in the above video is a projection of domestic political and technological anxieties. The three PIIE authors, meanwhile, conclude that “a look at social credit in China should prompt more public debate on aspects of concern in our own systems.”
WoW’s Manya Koetse touches on Western attitudes in another post on social credit, comparing its depiction in news cartoons from foreign and Chinese media:
Below, on the left, is Financial Times‘ Ingram Pinn’s illustration which was featured in a 2018 article discussing both private credit scores (e.g. Sesame Credit) and the national social credit implementation (for the difference between them, please see our “Open Sesame” article). On the right is a cartoon by state media outlet Xinhua – the same illustration is regularly posted across dozens of news sites when featuring social credit-related stories.
While the cartoon on the left illustrates people as carrying the heavy burden of their ‘credit score’ (note that only commercial programmes such as Sesame Credit actually have these scores), the cartoon on the right shows the social credit as flying over a group of cheering people.
In general, the illustrations on Social Credit in Chinese state media roughly present China’s nascent Social Credit implementation in two ways; (1) as punishing individuals for bad behavior and (2) as benefiting the collective, which builds on a more harmonious society together.
[…] All in all, the message these various illustrations propagate is straight-forward: those who stay off the black lists and behave like good citizens are free to go wherever they want, those who do not will be caught and lose their freedom of movement. They further emphasize that the Social Credit System is a combined effort, that will, allegedly, benefit the collective and make China a safer and more harmonious place. [Source]