The social credit system as method

Author: Haiqing Yu, RMIT University

China’s social credit system is widely viewed in the West as a digital surveillance system to categorise and guide people through reward and punishment. This perception continues despite efforts by scholars to build a morally normalised, rather than ideologically charged, framework to understand the system. The social credit system should be understood as method — a mentality of governance — not just a network of databases and policies to monitor trustworthiness. It is an ongoing social experiment to mould and govern socioeconomics, an experiment rooted in historical and biopolitical structures and systems.

Understanding the social credit system as method entails seeing the history of its role in China’s drive towards economic prosperity. The concept of credit rating surfaced in the 1990s when the People’s Bank of China established China’s first bank-credit registry. In 1999, the idea was expanded upon with the release of the National Credit Management System report by the Chinese Academy of Sciences. The focus was economic — to manage financial and market irregularities including debt default and regulatory non-compliance.

State and non-state actors have played important roles in the design and implementation of China’s social credit system. They associate the need to address financial misbehaviours and China’s ‘trust’ crisis with the post-Mao disintegration of the socialist moral order. But what began as a financial regulatory tool is now being applied to broader moral-legal dimensions. This can be seen in pilot programs conducted by local governments — in Suining in 2010 and Rongcheng in 2013 — and by private companies such as Alibaba’s 2015 Sesame Credit scoring system.

In 2014, the State Council released its Planning Outline for the Construction of a Social Credit System (2014–2020), the culmination of a decade of joint research, conferencing and consultations. The policy document calls on government agencies, business entities, social organisations and individuals to improve ‘trustworthiness’, often expressed as chengxin (integrity) or xinyong (creditworthiness). The social credit system mostly covers financial creditworthiness (zhengxin) and social creditworthiness (shehui xinyong).

The social credit system at the national level refers to the zhengxin credit rating which is authorised by the China Credit Bureau of the People’s Bank of China and supported by endorsed personal credit agencies, Baihang Credit and Pudao Credit. Zhengxin credit rating combines data from public and private online sources to provide a searchable database of companies and rate them for regulatory compliance. It is also used as a law enforcement mechanism, notably to blacklist legal persons of companies and individuals in debt default. Those on the blacklist face travel restrictions, reduced employment and promotion opportunities, public shaming and even collateral damage to immediate family members until they comply with court orders. The social credit system as zhengxin is still largely applied to the financial and corporate sectors and is broadly comparable to other credit rating systems in the West.

The social credit system as xinyong is more controversial because of its experimental intent to govern the social and moral spheres. Confucian ideas of moral ethics and collective mentality are drawn on to evaluate individual behaviours across administrative levels. This is seen in the local pilot projects that have used points-based systems to steer public behaviour towards China’s core socialist values.

Local officials see the social credit system as a tool of moral education and a solution for disciplining unacceptable social behaviours, such as refusing to vacate reserved seats on public transport and failing to show filial piety to elderly parents. Xinyong points are also deducted as an additional warning for minor infractions that have already incurred formal fines and punishment. Examples include violating traffic rules in Rongcheng or failing to comply with garbage sorting rules in Hangzhou.

The social credit system as xinyong is a patchwork of systems and practices to steer and correct behaviour, enforce rules set by the government and test the boundaries of behavioural manipulation and public opinion. Instead of a one-size-fits-all solution, the Chinese government has encouraged an experimental approach to implementing the social credit system. Incentives — not punishment — encourage good behaviours and compliance. Local governments are tasked with using more nuanced evaluative criteria and downgrading harsh or controversial punishments on residents for minor infringements, particularly those that fall within the moral domain.

Local experiments with the social credit system vary across cities and regions. The system’s vague and flexible legal-moral framework results in uneven implementation. As participation in the social credit system is voluntary, the rates of citizen awareness or buy-in across regions are low. But individuals working for government agencies and public institutions, such as schools and hospitals, are pressured to participate in the social credit system as part of their performance management and promotion requirements.

There has been a subtle change in people’s perception of the system during the COVID-19 pandemic. Discussions about the boundaries of the social credit system have surfaced, particularly concerning its misappropriation by local authorities as the panacea or catch-all for all social conduct.

Though the COVID-19 pandemic has delayed the establishment of the social credit system nationwide, the system has been repurposed in response to the challenges of pandemic control, illustrating the strategic ambiguity in its design and malleability in application. In November 2022 a new draft social credit law was released to address problems of vagueness and fragmentation and to guide future implementation. Like the social credit system, the draft law is a patchwork of existing policies and regulations that prioritise unification rather than clarification.

Viewing the social credit system as method of government evokes both its historical origins and experimental nature in China’s use of information technology in social and economic governance. These dual dimensions have characterised China’s socialist enterprise, which can be expressed by the axioms ‘crossing the river by feeling the stones’ (Deng Xiaoping) and ‘top-down coordination’ (Xi Jinping). The implementation of the social credit system, which attempts to balance the rule of law with the rule of morality, is a symptom of what has been called China’s fragmented authoritarianism.

The social credit system will continue to follow a dual-track system and be implemented under existing administrative and bureaucratic structures: the quasi-federal tiao-kuai institution, the community grid management system and neighbourhood monitoring. Reading the social credit system as a singular authoritarian entity, rather than as a piecemeal collection of actions that China’s leaders are trying to make smarter, also denies the narratives of individuals, families and communities — the very people actually experiencing it.

Taking the social credit system as method evokes its historical authenticity and experimental nature. It emerges as one of the most evocative legacies in the mentality of governance in contemporary China.

Haiqing Yu is Professor and ARC Future Fellow in the School of Media and Communication, College of Design and Social Context, RMIT University.

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