Friday February 22, 2019

How China's Social Credit System Affects Its Citizens and Businesses

We have previously documented China's social credit system, but a recent report from the National Public Credit Information Centre documents the effect it has had on Chinese citizens and businesses in 2018. The Chinese government has "discredited" 17.46 million people from purchasing plane tickets to travel and restricted another 5.47 million from purchasing high-speed train tickets. In addition to those restrictions, authorities have blocked individuals from "buying premium insurance, wealth management products or real estate, as well as shaming them by exposing their information in public." This pressure to conform encouraged 3.51 million individuals and businesses to pay off taxes, fines, and debts. Some cities rank their citizens on a AAA to D scale where everyone starts out with 1,000 points. There are more than 200 ways to gain or lose points. AAA rated individuals get free medical checkups, free water and other perks.

In villages, "information gatherers" document free labor that is performed by fellow villagers. Spending 8 hours to install a new basketball hoop will net an individual 2 points, while donating a TV to the village meeting room is worth 30 points. Another villager has a son serving in the army which is worth 10 points. These points are accumulated and added to the person's "credit score" and are rewarded with extra "rice, cooking oil and cash rewards from the village committee and are lauded on village bulletin boards as role models." Not taking care of elderly parents or littering will deduct points from their credit scores.

In the lobby of Rongcheng People's Hospital, senior staff member Wang Shuhong said she drove more carefully now because traffic infringements cost not just money but also social credit points. "Many from the general public may not know about it, but we public servants do know. It does have a binding effect on us," she said. According to Wang, applicants must have a ranking of A or above to be hired for permanent positions at public institutions. For contractors, such as security guards, B is a minimum. Over 3.59 million Chinese enterprises were added to the official creditworthiness blacklist last year, banning them from a series of activities, including bidding on projects, accessing security markets, taking part in land auctions and issuing corporate bonds, according to the 2018 annual report released by the National Public Credit Information Centre.

Discussion