China’s New ‘Social Credit’ System: Big Data, Mass Surveillance and Judgment

What is China’s “Social Credit System”?

The Government of China has been working with several large financial institutions to develop a supreme “social credit” system that will give each citizen a single number rating.

According to Chinese officials, the rating system is meant to measure an individual’s overall “trustworthiness”. And unlike a traditional credit score, the new credit system will take into account much more than a person’s banking history.

Utilizing national databases, scores will be determined using a variety of factors, like credit, age, job, health, academic performance and lifestyle. Also, it’s rumored things like not caring after your parents properly, criticizing the ruling party,”inaccurate reporting” or even minor traffic violations could lower scores.

The new system — which is set to be implemented by 2020 — is still in the testing stages, with the Chinese government currently watching eight state-approved pilot projects. Each project is using arcane algorithms to create their own unique scoring system. Eventually, the Chinese government would like to use these scores to rank everyone inside China’s borders. Citizens with good scores will have an easier time getting access to certain privileges, like permission to travel abroad, their children into the best schools, a loan, a hotel room, a job, a date and more.. While individuals with lower scores, will be punished by the cold shoulder of society.

As scary as that may sound, the Chinese government is heavily invested in making their new social credit system a reality.

This is not the first time China has tried to force an omnipotent rating system on their citizens. In 2010, a similar system — that rated citizens “A” through “D” — was tested in China’s Suining County. The grading system was eventually abandoned by the Suining government after an outcry of disapproval from the people. In spite of the failed attempt in Suining, the Chinese government is still attempting to create another all-encompassing scoring system.

Why does China want to implement this system?

It’s likely that the system is in large part an effort to increase the totalitarian reach of the Government of China, but China has positioned the idea with focus on the benefits the system will have on their citizens and society.

“At the heart of the social credit system is an attempt to control China’s vast, anarchic and poorly regulated market economy, to punish companies selling poisoned food or phony medicine, to expose doctors taking bribes and uncover con men preying on the vulnerable.”

…according to The Washington Post.

With the lack of certain regulations and the growth of fraud in China, the new system will aim to increase regulation, create transparency and build trust between citizens. Once fully adopted, the system will be used by organizations and individuals as a primary reference to measure an individual’s credibility. Making it more difficult for a scam-artist to take ownership of a fake name, because the false identity wouldn’t be linked to their real social credit rating.

Also, many people in China don’t own a house, or a car, so they don’t have a traditional credit score. Having a more universal scoring system, could allow many of these people to put their past history on record. Which in turn, could grant them access to certain privileges that may not have been available to them without the new system.

Key Challenges

It might be easy for Chinese officials to get lost in the clouds with the benefits a system like this may produce, but putting an accurate number on the “trustworthiness” of a citizen is currently unfeasible. Despite the ominous and confining nature of the whole idea, the system will fall short because of a few key challenges: getting accurate data, deciding which strings of data or individual components to include in the score, and deciding how to weigh the chosen components against one another.

The Data

Companies pay millions for data, especially when that data leads to more customers, more users and ultimately more money. Hundred billion dollar companies like Google and Facebook were built on data, because data is valuable. Getting basic information on an individual, like their age and gender, may cost less than a penny, but as the weight of the data increases, so does the price, and when you’re talking about collecting and analyzing a complex variety of data on a billion people, that price goes up pretty quick.

Of the eight companies currently running pilot scoring systems in China, Sesame Credit is leading the pack. Sesame Credit is the financial wing of Alibaba, the online shopping network with over 400 million users. Alibaba’s vast databases give them a significant upper hand in creating China’s desired scoring system. But while companies like Alibaba may have a ton of information about their users, hundreds of millions of Chinese citizens don’t use Alibaba. And while many of China’s citizens don’t use Alibaba, many don’t have a traditional credit score or access to the internet as well. Collecting data on citizens that don’t use a service like Alibaba, don’t have a credit score and aren’t online, is a legitimate challenge.

While it’s likely the Government of China has records on all of their citizens, the associated data is surely limited, especially when you have a population of around 1.4 billion and many of those people live in rural communities.

It’s also important to note, that the needed data will not only be expensive and nearly impossible to obtain, the data also needs to be error-free. This means the countless number of records that need to be collected and reviewed, will also need to be checked for accuracy.

Determining the Scores

As difficult as collecting, analyzing and checking the massive amount of data will be, China must also figure out which factors and what frame of reference will be used to create the final scoring algorithm(s).

China is in a situation where they have to decide which factors best represent a person’s trustworthiness, while also determining which factors are actually measurable using obtainable data. With so many considerable factors, it’s very unlikely that accurate data (or any data) is available to measure all of them. This is a major issue, because the score keepers will have no choice but to use factors that are supported with data, instead of less quantifiable factors that might be a better representation of a person’s trustworthiness. In turn, this will decrease the accuracy of the scores.

Once the components (age, gender, academic success, job, credit score, lifestyle etc.) have been chosen, the next dilemma will be figuring out how these factors will be weighted against one another and with what validation.

A farmer near his village of Puduo, Yuanyang county. Image Credit: WikiMedia

A farmer near his village of Puduo, Yuanyang county. Image Credit: Wikimedia

Measuring a person’s character — or in this case, their reliability to be honest — is a much more complicated process (if at all possible) than rating someone’s credit score or reliability to make payments. There are many people who are healthy, look great physically, have awesome résumés and jobs…but are simply dishonest and do bad things when they can get away with it, generally motivated by selfish gain over the greater good. Properly labeling or scoring these individuals is difficult if they don’t have anything on paper to discredit their name.

At the same time, there are many people who are born poor or into adversity, that may be struggling financially or lacking the best education, but are hardworking and honest people. Since China’s new social credit system will likely weigh financial wealth and education heavily, this second group of individuals will probably score lower regardless of their integrity.

Since a system of this magnitude and with this purpose has never been created, deciding how to combat these challenges will be left to China’s best judgment.

The Outcome

Right now, many things are left uncertain — to name a few, we still don’t know:

1) When exactly the system will come to fruition

2) What specific factors will go into the scoring, how they’ll be weighted and how the data will be collected

3) What power that the single number score will have over its citizens

4) How Chinese citizens will respond to their new scores

5) How affective the new system will be in accomplishing China’s main goal — to create a more regulated, transparent and trusting society

With so many unanswered questions, it’s hard to know exactly what impact the new system will have.

What we do know for certain is China is fighting an uphill battle, overcoming the key challenges mentioned above will take significant resources. And as China keeps taking steps towards fully implementing their new system, they’ll surely be other hiccups along the way.

Read more here from BBC or The Independent.


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