On China’s Social Credit System
China’s Social Credit System is one of the most ambitious systems of contemporary surveillance. The State Council, the chief administrative authority of the People’s Republic of China, gave the first public mention of this proposal back in 2007, and a more detailed policy document was issued in mid-2014. Here the State Council proposed the creation of a vast system of surveillance in which every citizen would be given a numerical score that indicated their trustworthiness. This system would be based on wide-reaching surveillance of online and offline actions, with data-traces of everyday life stored in centralised databases, where they would be groomed by algorithms looking to extract patterns and launch automated control processes. These patterns would then be interpreted in a strongly moral rather than merely commercial way. Taken together, the algorithms would settle on a single number, the ‘Citizen Score’, a digit that has massive impacts on people’s lives, in terms of both punishment and reward. The State Council wants to make the Social Credit System compulsory for all of China’s 1.4 billion citizens, with the official planning period completed in 2020. For it,
Accelerating the construction of a Social Credit System is an important basis for comprehensively implementing the scientific development view and building a harmonious Socialist society, it is an important method to perfect the Socialist market economy system, accelerating and innovating social governance, and it has an important significance for strengthening the sincerity consciousness of the members of society, forging a desirable credit environment, raising the overall competitiveness of the country and stimulating the development of society and the progress of civilization.
Sincerity and socialism, competition and civilisation, morality and markets—all mediated by cybernetic computing-machines. The Social Credit System is a form of cybernetic capitalism but with ‘Chinese characteristics’, my adaptation of Deng Xiaoping’s phrase ‘socialism with Chinese Characteristics’. Taking over from Mao, Deng sought to modernise China through sweeping reforms in agriculture, industry, techno-science and the military, creating Special Economic Zones to attract foreign direct investment, and selectively encouraging free enterprise and market liberalisation in order to increase exports. These transformations increased across the 1990s and 2000s, with China forging a very powerful form of authoritarian state capitalism highly integrated with the world market. With the rise of Xi Jinping, the nation’s current Paramount Leader, China’s system has turned increasingly cybernetic.
Over the last quarter of a century China has sustained massive economic growth. Between 1990 and 2020 it maintained an average GDP growth rate of 9.3 per cent, a breakneck curve that saw it become the second biggest economy on earth. As a point of comparison, over this same period the US economy had an average growth rate of 2.5 per cent. Wages in China quadrupled, whereas they have been functionally stagnant in the United States since the 1970s. The vast modernisation project that this growth allowed has resulted in significant improvements in resources available to the country’s people, thus providing a major source of legitimacy to the Party at the helm of this great transformation. One famous fact captures something of the scale of this growth: between 2011 and 2013, China consumed more cement than the United States did during the entire twentieth century. Like the United States’ boom in the post-war years, this position of strength runs in contradictory parallel with a pervasive weakness, for this frantic building spree was an attempt to deal with the crisis dynamics of capitalism that convulsed the world in the aftermath of the Global Financial Crisis. As with earlier ‘economic miracles’ in such places as South Korea, this tremendous growth has come at incalculable cost, leaving ruined lives, ravaged landscapes and layer upon layer of toxification—from smog-besieged cities to a rapidly warming world.
This broader context of tremendous upheaval and unsettling, growth and waste, strength and weakness is essential background to understanding the ambitious surveillance project under way in China. Of course the vast surveillance network that underpins the Social Credit System is not unique—the financial wizards of Wall Street, the tech-titans of Silicon Valley and the spooks of the military-intelligence complex have been developing its basic processes for decades. Indeed, such systems are central to their ability to extract profit and project power on a world scale. A key difference in China is the active involvement of the State Council in taking centralised control of the system and assembling it according to a stated plan in collaboration with technology corporations. This mix of power manifests differently from the US model, where the state sits in the background behind various corporate enterprises. In the context of escalating tensions between China and the United States—and its sub-imperial satellites such as Australia—these different models of cybernetic capitalism are locked in competition with one another. This is a struggle to discover which version of automated domination will prevail.
Finance, usury and debt
‘Credit’ is a curious concept in China, with the word—xinyong—being central to traditional Confucian ethics. Traditionally, it was a moral concept that referred to one’s trustworthiness—the honesty of one’s character. Since China began its post-Mao market metamorphosis, the concept has been extended into the lofty spheres of finance. One core aim of the Social Credit System is to allow more people to borrow money, with the Citizen Score a key factor in determining one’s ability to access credit—or, to say the same thing differently, one’s ability to get into debt. This inversion is significant, for it helps to tease out the shifting power relations in play. When someone takes on debt they make a promise to devote part of their future to repaying this debt, with interest. The other side of this relationship is the creditor, who gets guaranteed extraction of wealth via interest, one of the core components of all financial profit. Thus, China’s proposed apparatus could provocatively be called the ‘Social Debt System’.
The word ‘finance’ first appeared in English with the rise of the capitalist world system in the sixteenth century. Coming from the French, it originally meant ‘to pay ransom’, and was soon extended to encompass both state taxation and what we still call a ‘fine’, as in a state-imposed penalty, backed up if need be by police, courts and prisons. Finance only came to mean ‘money management’ towards the end of the eighteenth century. This is a curious etymology, for it shows not only finance’s long-term dependence on the state but also its necessary underpinning in forms of violence, as it can hold one to ransom. This goes against common ideological fables of the market as a place where self-interested individuals are imagined coming into harmonious contractual relationships with one another in order to exchange commodities and maximise profits. This classical liberal vision leaves the state outside its framework, yet the ability to enforce debts, and private property relations more generally, must rest on structures of organised violence that are intrinsic to capitalism. Without at least the threat of violence, debtors may not repay their loans, property could be stolen, intellectual property could be pirated—all of which would corrode or forbid the processes of capital accumulation.
Consider what happens if one fails to service debt on a mortgage (another financial word with a morbid etymology: it comes from Old French meaning literally ‘death pledge’). Sooner or later, the crediting bank will send the police, or a sheriff, bailiff or other kind of armed bureaucrat. These officers will inform the debtor of the need to pay their debt or suffer the consequences, which could include fines, eviction, community service, beatings or imprisonment. In other settings, a creditor might send debt collectors, goons, gangsters or mercenaries to enforce this relation. Police evictions have been the grim fate of a huge number of families in the United States and Europe in the extended aftermath of the Global Financial Crisis. In the United States in 2016 alone, an estimated 2.3 million people were evicted, although this enormous number is considered to be a significant underestimate. What’s more, as a result of the COVID-19 crisis, 30 to 40 million Americans are at risk of eviction.
The practice of lending money at interest—long known as ‘usury’—has over history been damned by the major universalising religions as well as by various states and empires, and there have long been attempts to limit the actions of moneylenders. Hebrew prophet Ezekiel described usury as an abomination, among the gravest of sins, down there with murder and rape. Aristotle denounced it in Politics as an unnatural practice—‘breeding of money’, or using money to make money without producing anything. Such views predominated until the rise of capitalism, whereupon the ‘breeding of money’ became a central organising principle of society.
Like all money-using societies, China has a long history of attempts to limit moneylending. One of the reasons that states have sought to limit usury is that it can sow the seeds of revolt. This echoes across history: after a spate of bad luck, a peasant family is forced to borrow money and falls into the hands of a moneylender. A little more bad luck, plus a few missed payments, and the moneylender seizes the peasant’s property and proceeds to extract rent from them. If such situations multiply, rural discontent can easily spill into a peasant insurrection. Occasionally such insurrections have transformed into revolutionary forces that have toppled governments. Indeed, many of China’s great dynasties began as peasant insurrections: the Han, Tang, Sung and Ming—as well as the Maoist revolution that originated the current regime.
In the first half of the twentieth century, usury was common in China, being the province of landlords and merchants, who often enforced predatory debt collection using violent gangs. This was captured in The White-Haired Girl (1945), a famous story with many versions presented as revolutionary opera, ballet and films and enshrined as one of the Eight Model Plays. Set in the 1920s and ’30s, it is based on the real-life experiences of various women, and captures the social effects of usury. The practices of usury were crushed following the 1949 revolution, with cheap-credit cooperatives providing public loans to peasants. But these practices shifted following China’s market metamorphosis that began in 1978, and a revision to the constitution was made in 1982 so as to re-establish absolute private-property relations. Tremendous growth occurred at the same time as spiralling inequality, thus setting the conditions for the return of usury.
China’s Social Credit System belongs to the trajectory of using state power to back up capitalist relations, thus facilitating usury and the ‘breeding of money’. In part, the system is being imposed because the State Council worries that China’s consumer economy is underfinanced and it is looking to prop up spending via the extension of debt in an attempt to counter the slowdown in growth. This can be understood as part of a global pattern of capital accumulation in the early twenty-first century demanding tremendous amounts of debt-fuelled consumption to deal with the consequences of overproduction, all in an attempt to achieve infinite growth within finite nature. To make up for this structural problem, overconsumption is pushed by powerful forces across society, including via technologies designed with built-in obsolescence and compulsory upgrade cycles, huge advertising industries designed to manufacture desires that can never be fulfilled, and debt industries that can extract rent.
One of the main stated purposes of the Social Credit System is to facilitate more borrowing. Before they hand out a loan, moneylenders want to be sure the borrower has the means to service the interest and the potential to repay the debt. This is where credit-rating systems come in, for they work by analysing people’s social practices to predict their ability to repay a debt, be it via a credit-card bill, a mortgage or a loan app. In this sense, credit rating requires a system of surveillance to abstract data from material reality so as to provide the centre of power with the means to make predictions about a person’s ability to repay. Going far beyond narrow concerns with payment histories, credit rating through cybernetic surveillance draws in the data traces of a vast array of social practices that are extracted, processed and sorted by the networked computing-machines that increasingly mediate and financialise everyday life. The issuers of credit ratings believe that ‘all data is credit data’, as they seek ways to stitch together incommensurable big data sets using risk-assessment algorithms. Ultimately, all factors are drawn into an equation geared towards the narrow interests of the creditor, the simple dictate at the heart of finance’s extractive processes: will the debtor repay the loan and service the interest?
The State Council is keenly aware that most people in China have limited or no credit history, and hence it is difficult for them to get a loan. This is seen as a problem because it limits people’s ability to spend money that they do not have and thus may slow economic growth, the sacred cow of all capitalist states, and of particular importance to China, as growth is a major source of legitimacy for the Chinese Communist Party. In order to lend money to those without credit ratings, surveillance transforms people into data-sets to be processed by the rent-seekers. States and capital needed to survey and simplify the world in order to facilitate the concentration and centralisation of power, as well as project control. Today, states and capital are likewise seeking to reduce social complexity in order to project control over it, with multidimensional, living beings reduced to simple numbers. It seems that ‘seeing like a state’ and ‘seeing like a bank’ are parallel processes, with the Social Credit System serving as an exemplar of how the two are being reorganised and merged in the age of cybernetic capitalism.
In China, rather than leave openings for foreign corporations, credit-rating problems are being addressed by the state. To develop a credit-rating system fit for the twenty-first century’s ‘socialist market economy system’, the State Council picked eight Chinese corporations and issued them with licences to develop systems and algorithms for the Social Credit System. This outsourcing went to some of the biggest players in the Chinese tech sector, who are also some of the world’s biggest tech-titans.
One of the most important of the eight original Chinese companies, Alibaba, is a key collaborator in the creation of the Social Credit System. This sprawling conglomerate has a market capitalisation of approximately A$709 billion—around the same as the GDP of Poland or Sweden. Alibaba introduced Alipay, a payment system that allows people to buy things offline and transfer money to other Alipay account holders. For example, if someone wants to buy a bowl of rice porridge from a street vendor, they could use their mobile computing-machine to take a photo of a QR code, type in the amount—say 3 yuan—and hit go. Then the vendor checks their device, confirms the money has been transferred, and the transaction is settled. These days, this operation applies to basically everything, all but replacing cash: even musicians busking on the street have QR codes for donations. Alibaba’s system is vast, overtaking PayPal back in 2013 as the world’s largest mobile payment platform. In 2020, Alipay had 54 per cent of the market, followed by WeChat Pay, owned by the tech-titan Tencent, with 40 per cent of what is functionally a duopoly dominating an enormous market—as well as being among the most powerful corporations on the planet.
The Chinese cashless sector has expanded dramatically, from 3.5 per cent of all market transactions in 2011 to over 80 per cent in 2017. In 2017, this meant that around $8 trillion of transactions took place in China, which dwarves the $62 billion worth of mobile transactions in the United States. Put differently, for every $1 Americans spend via mobile transaction, Chinese citizens spend around $1300.
These enormous numbers point towards transformations in social practice in China on a grand scale. How people are going about their everyday lives is increasingly being mediated by computing-machines, with this privatised arrangement providing more opportunities for techno-finance to extract profits and social power from the whole arrangement. In addition to collecting transaction fees, Alibaba and Tencent extract huge amounts of surveillance data, all of which is mined for advertising purposes, as well as feeding into their respective credit-scoring businesses, Tencent Credit and Sesame Credit, as well as into the State Council’s overarching Social Credit System. Such dynamics are part of the uneven global drive for a ‘cashless society’.
Carrots and sticks
Under the tech-titan Alibaba’s umbrella lies Ant Financial Services Group, and beneath that is Sesame Credit, one of the State Council’s former prospective licence holders for the Social Credit System. This corporation’s initiative has provided the state with some of the infrastructure for the public system. First, Alibaba has not revealed the ‘complex algorithm’ used to reduce people to a single number. It has, however, revealed a number of factors that are taken into consideration in this black-box process. Credit history and fulfilment capacity are central, with the algorithms going over people’s payment histories and their ability to service debts. Behaviour and preferences are implicated in this, with the algorithms drawing conclusions about people according to their actions as gathered by cybernetic surveillance. Algorithms might note a person’s shopping habits and see them as a measure of their character, with higher scores going to those with higher levels of consumption. For example, someone seen spending money on luxuries—imported whisky, perfumes, designer brands—could see their score go up, whereas someone who spends their money on things frowned upon by moralistic elites—violent computer games, cheap alcohol, anything considered vaguely subversive—could see their score fall.
The credit score can also be affected by other social practices. If someone jaywalks and a CCTV camera with facial recognition pings them, their score may drop, or if someone else makes a reservation at a restaurant and fails to show up without cancelling or is found cheating in an online game, their score may drop. Conversely, if someone has the luxury of spending an hour in the gym each day, then their score may rise. Social relations between friends online are also a factor in determining a Social Credit score. Sesame Credit gives points for sharing what they call ‘positive energy’ online. Announcing publicly on social media how great China is or how well the economy is going can lift a score. And a person’s score is connected to their friends’ scores: if you are friendly with someone with a high score who is always posting wonderful things about the status quo, that will likely reflect well on you. Conversely, one does not want to associate with a dissident!
The Social Credit System is being designed to punish people if the computing-machines determine that they have broken ‘trust’. The State Council’s planning document summarises its intention thus: it will allow ‘the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step’. This translates to an elaborate system of automated carrots and sticks. On the carrot side, Alibaba gives instant loans to anyone whose points get to a certain level (as long as the credit is spent on their products). Achieve a slightly higher score and you can get a loan to spend anywhere. Get a higher score again and you will be fast-tracked for a visa to visit Europe. Having a higher score leads to cheaper public transport and shorter wait times in hospitals. (These examples have parallels around the world whereby government and corporations attempt to use ‘nudge’ tactics to push people into being better consumers, workers or citizens from the perspective of power.)
On the stick side of the equation, the State Council released a policy document elaborating the consequences of having a low Social Credit score. The document is detailed, with wide-reaching proposals on how to punish those deemed untrustworthy by the algorithm. For example, a person with a low score might have their ability to receive government subsidies or support restricted. A low score would make renting a property or finding a job more difficult. As of early 2018, 11 million flights and 4 million train trips had been blocked by the system owing to people’s low scores. At the end of 2017, a list of 8.8 million people was put online to publicly shame them as debtors. Indeed, assembling debtor lists as part of a name-and-shame campaign was one of the first steps taken towards the Social Credit System. The document recommends restricting low scorers’ ability to catch trains and aircraft, visit hotels and restaurants, send their children to high-fee schools, or build or renovate a house. According to the System, failing to pay an interest-bearing loan to an unproductive rentier class of financiers is seen as socially reprehensible and worthy of automated punishment.
The State Council’s policy document specifically forbids a person with a low score from being employed in high management, finance, the legal sector, the military or as a civil servant, and would disallow membership of the Communist Party. There are a few ways that the System can function against the powerful, tapping into a popular anti-corruption sentiment. As of 2017, 1100 government officials were blacklisted, and the names of 33,000 companies that had violated laws and regulations were published. This kind of automated retribution system is an attempt to patch up a historically weak legal and judicial system in China, where concerns for justice have been sidelined by the quest for massive growth. While there is potential for the System to exert some control over the powerful, it is decidedly made to serve the interests of the elite and exert control from above. This is not only a Chinese phenomenon, for there are inherent biases in data and algorithms, and these tend to reproduce and intensify existing social inequalities, with problematic feedback loops.
As an inequality magnifier, the Social Credit System’s automated carrots-and-sticks approach even extends to one’s love life. One of the eight companies selected to develop the System’s infrastructure is Baihe, China’s biggest online-dating company. The dating app teamed up with Alibaba to allow its members to show off their good credit ratings. Baihe promotes people with good credit scores, giving them a better standing on its website, thus increasing their chance of getting a date. Showcasing some of the norms embedded in the System, Zhuan Yirong, Baihe’s vice-president, explains: ‘A person’s appearance is very important. But it’s most important to be able to make a living. Your partner’s fortune guarantees a comfortable life’.
As the credit/debt relations spread across the social body, it is abundantly clear on which side of the divide lies the real power. In 2017, a joint notice issued by the Publicity Department of the Central Committee of the Communist Party of China, the Supreme People’s Court and the China Banking Regulatory Commission advised authorities across the country that they must establish a debtors list. Debtors are to be listed on online platforms as a public-shaming punishment for their dishonesty.
About 200 million surveillance cameras are scattered unevenly across China but amount to about one camera per seven citizens—relatively fewer than in the United Kingdom or United States. Plans are emerging to weave this swarm of cameras into a single network. In Chongqing a pilot program called ‘Sharp Eyes’ has been implemented in which all security cameras are networked into a centralised data-sharing system that will merge to create a comprehensive surveillance dossier on every person, combining medical records, online purchases, social-media engagements and so on, all linked to the national ID-card system. The program takes its name from a Mao-era slogan, ‘the masses have sharp eyes’, in a cybernetically enhanced echo of China’s history of state repression and encouragement of citizens to report any suspicious activity and thereby participate in their own surveillance.
Further, the data accumulated in this surveillance bank will be able to be sold to any interested party, with an array of data brokers springing up to capitalise on this, ranging from the thorough to the fraudulent. Two Chinese reporters working for the Southern Metropolis Daily discovered that for 700 yuan (around US$100), and with the national ID number of the targeted person, they could easily buy enormous amounts of data about a (consenting) fellow journalist. They could see a detailed and fully accurate five-year history of the target’s places of residence, bank-account numbers, deposit records, car registration, plane and train journeys, hotel rooms they had stayed in, and so on. For a little more, they could have had access to live locational data from the target’s smartphone. The journalists’ story ran under a headline that began with the word ‘Terrifying!’. Significantly, information purchased from the data brokers was not intended for public distribution, and yet for a fee it was all available. This suggests that data is being leaked or hacked from insecure databases, pointing to possible corruption and/or inadequate security, and it shows how a centralised authoritarian state surveillance project can be crosscut into a decentralised, chaotic free-for-all. Anyone with $100 can be a Little Big Brother, with grim consequences for trolling, revenge, rivalry, jealousy, stalking, harassment and abuse.
Despite all this, one research project found that the Social Credit System enjoys a high degree of approval from the very people who are being rated by the system. It found that 80 per cent of respondents somewhat or strongly approved of it, with 19 per cent neutral and only 1 per cent somewhat or strongly disapproving. While these results likely reflect the nature of conducting surveys in an authoritarian surveillance state, this alone does not account for the results. Many people, particularly the wealthy and the elderly, interpreted the System through an individualised framework focused on the perceived benefits and convenience. Also, there seems to be an implicit assumption that the surveillance and calculations of Social Credit are impartial and objective. It should come as no surprise that such frames of interpretation—which smile, nod and totally neglect questions of social power—are championed by the state-controlled media system.
The dystopian nature of the System is not to encourage a ‘naughty China’ perspective, as is common among foreign reporting on the project. For instance, The Economist ran an article entitled ‘China invents the digital totalitarian state’, which unproblematically claimed: ‘Big-data systems in democracies are not designed for social control. China’s explicitly would be’. Expressing such an opinion requires one to take a seriously blinkered view of history and social power, and to adopt the absurd position that democracy and the so-called free market are synonymous, thus letting Silicon Valley, Wall Street and the Pentagon off the hook. Nevertheless, China’s Social Credit System is a compelling manifestation of cybernetic capitalism—of how financial mechanisms interlock with other systems of social control by combining mass surveillance, gamified corporate loyalty programs and debt peonage.
An excellent article. You seem to me to be as critical of the ‘democratic’ states as you are of China but obliquely, perhaps because full frontal criticism of democratic ‘free market’ capitalism is unwise in our system with its more subtle and perhaps less visible means of achieving social control (notwithstanding the US evictions).