Translated from GegenStandpunkt 1-20

A nationwide pillory for a harmonious socialist market economy

China’s Social Credit System

This year, after a long period of preparation, China is launching a “Social Credit System” (SCS), which will collect the available information on each individual Chinese person in a large database in order to evaluate their business and social behavior. In this way, the Communist Party wants to thoroughly optimize the country and its people. The starting point for the reform is a very critical and self-critical diagnosis of its level of socialist development.

Irresponsibility everywhere

The planning document for the SCS complains that people at all levels of Chinese society are constantly doing what they should not and must not do. Business leaders, state officials, judges, scientists, and even ordinary people are behaving ruthlessly toward business partners and others who depend on their activities; they lie and cheat, violating the good customs of business life and even the law.

“... a social atmosphere in which agreements are honored and trust are honestly kept has not yet been shaped, especially grave production safety accidents, food and drug security incidents happen from time to time, commercial deceptions, production and sales of counterfeit products, tax evasion, fraudulent financial claims, academic impropriety and other such phenomena cannot be stopped in spite of repeated bans, there is still a certain difference between the extent of creditworthiness in government affairs and judicial credibility, and the expectations of the masses.” (Planning Outline, 1.1.Paragraph 2)

The list of Chinese bad habits, which do not appear to be Chinese at all, continues page after page: bribery in the tendering of public construction projects, falsified statistics by government agencies, loans rejected by companies, prohibited practices in online business, unfair advertising, embezzlement of wages by entrepreneurs, insurance fraud and private individuals obtaining the compensation, etc.

The Chinese Communist Party is being confronted by consequences that are not at all specific to the country and by the excesses of the capitalism that it has prescribed for its people: in order to force “development,” it has unleashed private enrichment, transformed its communist functionaries partly into capitalists and partly into holders of political power, and has endowed them with the license and the mandate to employ the lower classes in the service of their private wealth, which added up together constitutes the wealth of the nation. In the interest of growth at all costs according to plan, it has encouraged them to be ruthless toward anything that does not serve “development” or do enough for it. Now, it sees some of the side effects of its growth imperative as counterproductive – so much so, that it is even claiming that progress itself and the nation's “general competitiveness” is endangered by it.

It blames the damages caused by its program and the conflicts implanted in society on the people: The small and big entrepreneurs are supposed to provide the Party with the accelerated growth of national capital, i.e. make maximum use of all the means for its success – and then, obviously against the Party’s orders, they exploit their workers, damage the environment, cheat customers and lenders. State officials are supposed to promote investment in their jurisdictions, remove everything that stands in the way of progress – and then they don’t respect the land rights of backward peasants and the residents of poor villages. Working people should also embrace the grand slogan “enrich yourself!” – and then they make demands and seek benefits that do not fit their role. People damage the Party’s great progressive program because they pursue private interests, which are prescribed and permitted to them, without regard for the interests of others, often in breach of signed contracts and the law.

“The social consciousness of trustworthiness and credit levels tend to be low, and a social atmosphere in which agreements are honored and trust are honestly kept has not yet been shaped.” (Planning Outline, I. 1.Paragraph 2)

Onwards to a “harmonious society”

The Party has had the experience, which again is not at all specific to China, that the law does not prevent what it prohibits. However, it does not accept the cynical insight that law breaking is part of the law and that the justice system punishes it retroactively when it becomes known. Its dissatisfaction with the fact that violations of the law “can’t be stopped despite reiterated prohibitions” reveals an intention to prevent lawbreaking in advance, which it does not expect from the law alone, even if the penalties are increased.  [1]

The Party is bothered by the calculating way that the citizens are dealing with the norms of the law, which weighs the benefits of transgression with the risk of being caught. It misses the adoption of the spirit of the common good that it associates with its laws, i.e. understanding the capitalist roles that it imposes on its people as a recognized duty to the community: The small and large private interests and power holders must act in conflict with each other as ordered and at the same time they should act responsibly toward each other, i.e. always with regard to the effects of their own actions on others and the whole. The capitalist conflicts being slugged out are not responsible, but rather define the socialist harmony which the Party wants to give to its people.

“Accelerating the establishment of a social credit system is an important foundation for comprehensively implementing the scientific viewpoint of development and building a harmonious socialist society; [the SCS] is an important method for improving the Socialist market economy system, and for accelerating and innovating in social governance; and it has important significance for strengthening the awareness of creditworthiness among members of society.” (Planning Outline, Introduction)

The Party, which has developed state socialism into capitalism, values and demands, like its ancestors, the morality of the citizens as a national productive force even under the changed economic conditions. It has apparently nicely accomplished this with the work ethic of competition, the imperative “enrich yourselves!” It is missing the accompanying decency, the practically effective habitual hypocrisy of selfless service to the common good. It still must drill in the fact that the transition from the mores of socialism to the virtues of competition does not simply ennoble egoism, but demands all the more readiness to serve the nation – or, conversely, that the undoubtedly existing love for the great motherland must prove itself in the daily practice of strict morality.

And because the results of the Party’s previous moral campaigns have not been sufficient, the desired discipline is to be brought about. The state party sets out to create a moral citizenry morality “where honesty and trustworthiness are honored, and sacrificing virtue for profit is dsigraceful.” (III. 1. Para. 1) And because it has learned from its great tradition of moral campaigns [2] that appeals are of little use, it will now organize the harmony of conflicting interests by continuously monitoring them.

A comprehensive database of decency and its use

For this end, the Party must first get to know its people personally. An identity number for each Chinese person enables meticulous accounting of his exemplary or wanton dealing with state regulations and resources. Thanks to new technologies, it is possible for ministries, commissions, and the National Bank to combine their data with administrative and police data. The customer files of internet companies such as Alibaba, Tencent, and Baidu, on for example payment behavior and supplier loyalty, are also requested.

The comprehensive nature of the data collection corresponds to the breadth of complaints about unacceptable behaviour. Whatever data is collected about the individual is standardized and weighted on the basis of various parameters and interpreted as an indication of the more or less responsible attitude of the individual and how he or she is likely to act in the future. A digitized combination of personal files, credit agency data, criminal records and other information, objectively evaluated by a social credit algorithm which is identical for everybody, authoritatively defines the level of trustworthiness of citizens and institutions. [3]

Unlike the retention of data by state authorities as practiced in all other civilized nations, the Chinese data retention is entirely public. Any entitled interested party can inquire about other people – business partners, tenants, future parents-in-law. Everyone can and should also inquire about their personal social credit status, i.e. how they are assessed by the state authorities. The positive and negative national pillory [4] of the “information society” seizes citizens and companies in their interest in a “good reputation” and their dependence on it in business and social life – and does not really rely on the educative power of this ideal side of contractual capacity. The ruling party also organizes the social and material consequences of a good or bad reputation itself: It weighs its demands for decency in competition and for conformist social and political behavior with material bonuses and penalties – beside and outside the justice system – in order to make adaptation to the demands unavoidable.

If the Party threatens companies that are guilty of something, in addition to legal punishments, with taxation that puts them in a worse position or to exclude them from tenders, temporarily deprives unworthy individuals of permission to use long-distance trains or planes, or destroys their professional existence by placing them on a “blacklist” [5] and ruins their private life [6], then it organizes, in addition to competition for money and because of it, a second, materially significant competition for a place in the hierarchy of state-certified virtuousness. [7]

Conversely, such social punishments define the use of the public infrastructure, or even participation in social life, as a reward for socially beneficial behavior. In China, riding on an express train, a place in a private kindergarten, and many other things are not only services for which one must be able to put down enough money, but also benefits for the decent, which money alone can’t buy.

Decent people and underdogs like it

“Contrary to what many people in the west believe, in private and during informal talks among friends, ordinary Chinese are not shy or concerned about expressing their opinions about politics....The people I spoke to seemed less concerned about giving up some privacy if it meant a significantly higher degree of security and certainty. And a lot of the people I spoke to perceived the new social credit system as a national project to boost public morality through fighting fraud and crime and combating what is currently seen as a nationwide crisis of trust, China has experienced a rising number of fraud cases and scams, as well as major scandals in the food safety and pharmaceutical companies. There is a widely held consensus that the punishment for these offenses is not enough to deter re-offending, with people committing crimes in one province and setting up a business in another the next day with few consequences. Some believe the social credit system will remedy this through the blacklisting system.” {Xinyuan Wang,“China’s ‘digital dictatorship’ welcomed by majority,” Asia Times, 12.21.19)

Like the Party, the citizens see immoral characters at work as soon as they feel disadvantaged or badly treated. They see the social credit program only as a punishment and re-education of others. They expect it to lead to more consideration from employers, better food in the supermarket, and fairer treatment by public officials. In return, they are willing to accept that their lifestyle will also be recorded and made public.

They do not see this as a threat to their freedom, as the politically correct guardians of Western values expect and demand of them: they have nothing to hide! In any case, they take it for granted that they are committed to conformity through organized social control, are put in the service of the nation and its progress. They think its only good that the others, who do whatever they want, should no longer get away with it.

One doesn’t even want to know how many decent people in the Western liberty stable would also welcome a universal block warden in the service of such a harmonized society.

Footnotes

[1] The SCS “is intended, for example, to prevent companies from deliberately accepting fines because it is cheaper to pay them than act in accordance with the law. Here the Chinese government argues that without the system, violations of environmental regulations, labour and trademark law or food scandals cannot be brought under control.: (M. Ohlberg, Digital Big Brother, International Policy 2/2019, p. 62)

[2] Hu Jintao’s 2006 campaign “Eight Honors and Eight Shames” was also the last either. “The government has tried to tackle the problem with a renewed moral campaign. A list of dos and don’ts, for example: ‘Be honest and trusting.’ And: ‘Avoid immoral acts for your own profit.’” Mark Magnier, “A crisis of trust takes a toll on Chinese society,” Los Angeles Times, 9.24.06). Today, Xi Jinping accompanies the introduction of ScS with moraI teachings: “Draft for Implementing the Moral Construction of Citizens in the New Era.”

[3] Not quite wrongly, an article in China Daily (11.1.16) defends the SCS against Western warnings of an Orwellian “Big Brother [who] monitors and controls every citizen right down to their private sphere.” The newspaper asks whether the business and moral information that the Social Credit System gathers on Chinese citizens is not actually available in the West on local citizens. It reminds us of the gigantic data collections of Facebook, Google, etc., of the numerous rating portals on the net that give doctors, teachers, sneakers and everything else a good or bad reputation, of the press that brings the atrocities of young and old to the public’s attention, and, last but not least, of the information provided by credit agencies on the credit scores of debtors. China, they say, urgently needs a credit information system to protect its economy. The country, i.e. its banks and credit funds, are losing over 600 billion yuan ($88 billion) annually because such information has not been available to date.

[4] “Chinese government agencies are making the lists publicly available through their databases and major news websites. Public exposure of creditors is an important aspect of the system.” (Merics China Monitor, 4/18, p. 11)

[5] “Blacklists can include individuals who oppose court decisions or companies that have violated economic conditions or regulations. In the corporate sector in particular, more and more rules are currently being formulated for crimes and misconduct for which affected companies can end up on black lists.” (Ohlberg /Ahmed / Lang, Central Planning, local experiments. Merics China Monitor 4/18, p. 10) The government’s success story is: “By the end of last year, so-called 'discredited' citizens were prevented from flying in about 17 million cases and from taking a high-speed train in about 5 million cases. The 2018 annual report of the National Reform and Development Commission (NDRC) also shows that more than 3.59 million Chinese companies have been placed on official blacklists.

[6] An example from the pilot project’s wealth of ideas: "In the pilot projects, the courts provide telecommunication companies with lists of the names of citizens who have ignored court-ordered payment demands (sometimes for relatively small sums of a few thousand yuan). When someone calls the people concerned, instead of a dial tone, the caller hears an announcement informing him that he has failed to comply – together with a request to call the debtor to comply with his legal obligations.” (Merics China Monitor 4/18, p. 12)

[7] Constructive forward-thinking from a resourceful lawyer of the western warning industry: “An entire service industry of its own is likely to emerge in the future in the area of the improvement and possibly the active ‘management’ of the influence of credit standing.” (Merics China Monitor 4/18, p. 13)