China, Politics, Technology

PDC 2 – Walking Through the Official Document on China’ Social Credit System

If you follow news on politics or China, you probably know the existence of Social Credit system in China. But all the Western media are too fixated on the citizen score and surveillance part. Let me walk you through the real Social Credit system.

When the news reports like one from Wired or ABC talks about social credit system, they would either reference this government guideline document directly or indirectly. So it is reasonable to assume that they are talking about “社会信用体系” discussed in this document. So what is it really about? Let’s talk about the main points in this document.

Scope of the Social Credit System

The document is a typical one from Chinese government which is lengthy and abstract. So let’s break it down to sections.

1. Overall Strategy on Social Credit System

In this section, the document talks about the current status social credit at this stage of development and the overarching principles. It highlights that the existing social credit system has made some progress, but there are issues with maturity and compatibility with economic and social development.

我国社会信用体系建设虽然取得一定进展,但与经济发展水平和社会发展阶段不匹配、不协调、不适应的矛盾仍然突出。

But wait a second, according to the news reports, social credit system is a new thing. Right, that’s quite typical of Western media, so let me explain a bit.

Social credit is a generic concept that has been there before this document. A more suitable name would be social credibility. It must be noted that the term “social” is quite commonly used to refer to society or populace in general, so anything to do with credibility of a person or an organization could fall under the concept of social credit. Before 2014, the system mainly consists of credibility of financial institutions, especially in rural area. For example, this book in 2010 talks about the policies on giving loans or funding to farmers and small businesses in rural areas, which is part of the social credit system.

Having cleared this part, let’s move on. So what does the issues with maturity and compatibility with economic and social development refer to? There are some points and examples given in the documents:

覆盖全社会的征信系统尚未形成,社会成员信用记录严重缺失,守信激励和失信惩戒机制尚不健全,守信激励不足,失信成本偏低;信用服务市场不发达,服务体系不成熟,服务行为不规范,服务机构公信力不足,信用信息主体权益保护机制缺失;社会诚信意识和信用水平偏低,履约践诺、诚实守信的社会氛围尚未形成,重特大生产安全事故、食品药品安全事件时有发生,商业欺诈、制假售假、偷逃骗税、虚报冒领、学术不端等现象屡禁不止,政务诚信度、司法公信度离人民群众的期待还有一定差距等。

The first point is that we do not have credit history information on people. This makes sense as credit card never really took off in China, especially in small cities and rural areas. This makes it hard for banks to decide who to give loans and who not to.

Second point is that social service market is not developed. There isn’t much structure and regulation in this market. This also makes sense because of lack of financial institutions focus on credit assessment, unlike Western countries.

Third point is that social credit awareness and credibility level is low. This is quite well-known in China and even outside China. Examples given includes manufacturing industry incidents, food safety incidents, medicine safety incidents, commercial frauds, fake products, cheating in academia, etc. I would say this is actually quite transparent coming out of government official document.

Now with the problem, what’s the proposed solution?

Better and more robust social credit system, in essence. There is not much substance in this section apart from generic objectives. So let’s move on.

2. Accelerate credit development in key areas

This section talks about 4 key areas that the credit system should focus on developing:

  • Government affairs credibility
  • Business credibility
  • Social credibility
  • Judicial credibility

Let’s dig into each of these quickly.

Government Affairs Credibility

Here the focus is on keeping government organizations transparent in terms of public information, increasing credibility of governmental agencies, leading the change on using credit information and credit products, strength credit management and education of civil servants.

I would say it is pretty standard for a government document. Whether enforced or not is another topic, but hey, at least it is in the guidelines.

Business Credibility

Business credit level is the focus of social credit system. Basically all the industries will have to push for better credit system, what’s specifically mentioned are: manufacturing, circulation, finance, tax, pricing, construction, government procurement, bidding, transportation, e-commerce, statistics, intermediate agency service, exhibition and advertisement, cooperation.

There are some details on how to implement credit systems for various industries, but I won’t go into them. If you are interested, you can read here for yourself using Google Translate.

Social Credibility

You might think this is the part where the document talks about assigning scores for each citizen, but it is not.

This section talks about different fields in the society that needs better credit management: medicine and birth control, social security, labor, education and research, culture, sports and tourism, intellectual properties, environmental protection and energy saving, non-governmental organizations, 自然人 (cannot find a good translation for this, which includes civil servants, legal representatives, lawyers, accountants, etc), internet service providers.

Judicial Credibility

This section talks about courts, procuratorate, public safety, law enforcement agencies needing better credit system.

In particular, this seems to mention the need to exchange and sharing of personal information across different governmental agencies. This includes breaking traffic laws, which will be added to “integrity records”. Note that in Chinese, “credibility” and “integrity” is closely related, and I am not sure how to explain the exact nuance in English.

进一步加强人口信息同各地区、各部门信息资源的交换和共享,完善国家人口信息资源库建设。将公民交通安全违法情况纳入诚信档案,促进全社会成员提高交通安全意识。

3. Improve education on integrity and building a culture of credibility

This is basically telling schools and companies to teach students and employees to be a good person with integrity, and form a positive culture of credibility. Nothing special here.

4. Accelerate the development of credit information system and application

Now this is something that Western media generally touches and speculate on. This section mentions that each industry needs to have proper credit records, but the scope is only for the companies and their employees, not the consumers.

It also mentions the need for localized credit system. This does include companies and individuals. So it means that local government would need some kind of database to record credibility of companies and individuals. However, given the vague context, it appears to refer to situations where the individual interacts with the governmental agencies (tax, law enforcement, etc). Not related to everyday events like shopping or crossing traffic lights.

The next part talks about “征信系统”, which roughly means acquisition of credit information. Now this is much closer to what the Western media talks about. It means companies that acquires and aggregates credit information should build credit systems and provide services to external parties.

加快征信系统建设。征信机构开展征信业务,应建立以企事业单位及其他社会组织、个人为对象的征信系统,依法采集、整理、保存、加工企事业单位及其他社会组织、个人的信用信息,并采取合理措施保障信用信息的准确性。各地区、各行业要支持征信机构建立征信系统。

对外提供专业化征信服务。征信机构要根据市场需求,对外提供专业化的征信服务,有序推进信用服务产品创新。建立健全并严格执行内部风险防范、避免利益冲突和保障信息安全的规章制度,依法向客户提供方便、快捷、高效的征信服务,进一步扩大信用报告在银行业、证券业、保险业及政府部门行政执法等多种领域中的应用。

An example of such company would be Ant Financial Services Group (owned by Alibaba), which provides Sesame Credit as a product. This is something similar to 3rd-party credit companies in Western countries where credit card companies and banks pay them to get credit information.

This also talks about the need for a central credit platform, but the scope is limited to financial sector:

推动金融业统一征信平台建设。继续推动银行、证券、保险、外汇等金融管理部门之间信用信息系统的链接,推动金融业统一征信平台建设,推进金融监管部门信用信息的交换与共享。

Last but not the least, it also mentions the need to push for information exchange and sharing. This is more generic and wider in terms of scope, compared to previous sections. It requires different regions and different industries, under the condition of protecting the privacy, having clear responsibility and having accurate, timing data, to establish methods for sharing credit information and building a common credit network.

There are of course many interpretations and speculations you can have from such wording. So I will leave the original quote in Chinese below:

逐步推进政务信用信息的交换与共享。各地区、各行业要以需求为导向,在保护隐私、责任明确、数据及时准确的前提下,按照风险分散的原则,建立信用信息交换共享机制,统筹利用现有信用信息系统基础设施,依法推进各信用信息系统的互联互通和信用信息的交换共享,逐步形成覆盖全部信用主体、所有信用信息类别、全国所有区域的信用信息网络。各行业主管部门要对信用信息进行分类分级管理,确定查询权限,特殊查询需求特殊申请。

5. Perfect the mechanism of social credit system with reward and punishment as key focus

This is where the travel bans mentioned in Western media come from.

For rewards, it mentions giving awards and publicity to model individuals and companies. Various sectors will have “green lanes” given to “those with integrity and credibility”, for priority and simplified processes. Note that this section does not mention scores, it merely says “诚实守信者”, meaning people with integrity and credibility.

For punishments, it focus on companies and financial sectors, rather than social aspect of individuals like travelling.

At the end of the section, it also has a part that talks about protecting the subject of credit information (individuals). So basically companies and organizations should not misuse personal credit information and should offer protections on personal privacy.

6. Establish supporting framework

This section is basically for local government officials to read up on how to support the various sectors in implementing the social credit system. For example, having pilot projects, example projects, giving more budgets, etc. Nothing really interesting.

What about the cameras, CCTVs and citizen scores?

I assume you are referring to these ones shown in ABC News:

10256380-16x9-940x529.jpg
Dandan says surveillance in China’s public spaces makes her feel safe, even if the government uses it to keep an eye on citizens. – ABC News

 

Well the truth is, I don’t know. But I strongly believe this is not real and the photos and videos are just illustrations done by ABC News. A few reasons:

  • Nation-wide standardized Social Credit score is not out yet (at least publicly). Currently there is only private ones like Sesame Credit. Even if it is out, I doubt ABC News would be the sole organization to obtain raw photos and videos out of the system. No other news organization showed similar photos and videos. So the score shown in the photo is most likely fake.
  • BBC had an in-depth look at CCTV surveillance situation in China in Dec 2017. And the focus of the system was on identifying the person, rather than displaying the social credit score. So these two systems appear to be independent as of now. And I would expect BBC News to be among the first to have any hands-on experience when they are combined together, given this past precedence.
  • The word in the photo and video says “Social Credit System”, instead of “Social Credit Score”. To me as a native Chinese, this is quite odd.

Conclusion

So, all in all, while buying certain products or crossing red light might affect your score in social credit system, that’s not all there is in social credit system. It is enforced on companies as well as individuals. The credit platform where the scores and numbers are used seems to focused on financial sector, whereas the social parts are more of a guideline and not something that can be quantified easily.

Let me know if I missed anything or said something wrongly in the comments below. And check out my other posts on more China-specific topics.

Updates

As a HN user pointed out, the social credit system was used to bar people from taking planes and trains (in newer documents, after the original document was released):

Bonus content related to this topic:


Cover photo from https://unsplash.com/photos/N2HtDFA-AgM

 

2 thoughts on “PDC 2 – Walking Through the Official Document on China’ Social Credit System”

    1. Hey, the exact translation for the word does seem a bit odd, but I searched online and there doesn’t seem to be good equivalent term in English, the translations are generally either circulation, market or currency.
      So I will translate the explanation I got from the Chinese wiki[1]:

      The field where the medium of exchange of goods is currency

      [1] https://baike.baidu.com/item/流通领域

      Like

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