Author | Jaime Ramos
We are living in a strange era of online ratings and "likes" filtered by powerful big data management tools and artificial intelligence. When this collection of data is based on an institutional citizen conduct grading system (with rewards and punishments), we then refer to it as a social credit system.
This type of instrument has led to an in-depth ethical and moral debate, between those who consider it to be a form of institutionalized social engineering and based on a conditioned reflex; and those who see it as an opportunity to promote coexistence and tackle complex challenges.
In this regard, since the start of the millennium China has been testing the possibilities of its social credit system. Despite its critics, the country has focused more on boosting economic benefits than designing a formula of mass repression. According to the People’s Bank of China, by the end of 2020, the program covered 1.1 billion inhabitants and 47 million companies and businesses. These figures give us a good idea of the pros and cons involved in this technique for governance.
Advantages of China’s Social Credit System
China’s Social Credit System: #XiJinping has big plans for #China. To be decided at upcoming #19PC #PartyCongress pic.twitter.com/k49XABh4IY
— MERICS (@merics_eu) August 17, 2017
Below we shall analyze the advantages of the Chinese example. The official message is that the system is simply meant to create a predictable, fair and transparent business climate. The alleged benefits include:
- Reduced crime rates and improved security.
- Economic development and financial stability.
- Consumer protection.
- Civic behavior and citizen responsibility.
- Greater administrative efficacy and political personalization.
- Reduced corruption.
The latter has been a key point in how well participants accepted it. Up to 80% of participants in these programs were in favor.
Disadvantages of the China’s Social Credit System
Some of the Dystopian threats that could emerge from the Chinese case are:
- Less freedom of expression.
- Invasion of privacy and collection of sensitive information.
- Permanent surveillance.
- Injustice and discrimination based on the opacity of criteria and arbitrariness.
- Restricted mobility.
China’s Social Credit System
China’s example is a complex one. While the official message transmits confidence indicating that the system does not foster punishment formulas and undertakes to develop an ethical tool that does not include, for example, harmful use of AI, its fiercest critics have been asking for it to be stopped for years, listing some of the consequences. In 2018, for example, China banned 23 million offenders from buying plane or train tickets. 128 people were not allowed to leave the country as a result of not paying taxes.
These examples are part of the reason the Chinese authorities had to offer clarifications and added new criteria for the system, specifying, in particular reasons and categories for punishment and, at the moment, limiting its application to fiscal matters and focusing more on legal entities.
PayPal and its attempted social credit as an experiment beyond China.
The Chinese case is unique and has an impact on today’s use of technology, in particular, regarding data collection and privacy management. We recently witnessed the debate on the $2,500 fine that PayPal was going to impose on users who contributed to the spread of misinformation. An initiative that ended up being revoked.
What does seem to be clear is that this is a dispute with an obvious legal loophole due to technological variables. Societies have been perfecting codes to regulate criminal and civil responsibility for centuries; or those of public administrations with regard to citizens. In fact, the Latin phrase Quis custodiet ipsos custodes? isaround 2,000 years old. The key seems to lie in establishing when rights and freedoms have been breached or restricted, even if they are voluntary or technologically advanced.
Images | Freepik/freepik
FAQs
Final answer: The social credit system in China has potential advantages like improved trust and reduction of crime, but also disadvantages like lack of privacy and potential abuse of power. Whether the advantages outweigh the disadvantages depends on individual viewpoints.
What are the advantages of the social credit system? ›
The alleged benefits include: Reduced crime rates and improved security. Economic development and financial stability. Consumer protection.
What are the benefits of having a high social credit score in China? ›
With more favorable loan terms, those with good credit have better access to buying homes and starting businesses. Fewer inspections and audits. The government often favors people and businesses with high social credit.
What are the arguments for the social credit system? ›
Proponents of social credit systems argue that honest citizens are expected to behave in a positive manner, contributing to the society at large with a multitude of favorable behaviors and actions.
Who oversees the social credit system? ›
Managed by the National Development and Reform Commission (NDRC), the People's Bank of China (PBOC) and the Supreme People's Court (SPC), the system was intended to standardize the credit rating function and perform financial and social assessment for businesses, government institutions, individuals and non-government ...
What are some of the benefits and disadvantages of credit? ›
High credit card interest rates — and how quickly they can result in mounting debt balances — are a downside of credit cards. But if you pay off your balance in full and on time, you can reap benefits like rewards and a strong credit score.
What are two advantages and two disadvantages of using credit quizlet? ›
List and describe two advantages and two disadvantages of credit. Two advantages of having credit are that it expands your purchasing power and raises your standard of living and is convenient. Two disadvantages of having credit include that the purchases cost more over time and it can lead to overspending.
What is your social credit score? ›
According to various media outlets, this social credit system evaluates citizen trustworthiness based on a complex combination of personal data, like demographics, online and offline behaviors, and social network.
What is the highest social credit score in China? ›
A maximum of 1,300 points can be reached. Easier access to cash loans and consumer credit. Priority for school admissions and employment.
How to lose social credit? ›
Public shaming
For example, engaging with companies that have a low social credit score (such as those that are 'blacklisted') can reduce one's own social credit score. In addition, if an individual with a poor social credit rating opens a business, the business may automatically begin with a low social credit score.
Social Credit elevates the importance of the individual and holds that all institutions exist to serve the individual – that the State exists to serve its citizens, not that individuals exist to serve the State.
Why is China's social credit system controversial? ›
Critics, however, regard it as an invasion of privacy and personal freedom. One concern is that the ability for the government to assign these ratings is dependent on China's increasingly dense network of surveillance cameras and the advancement of artificial intelligence technology [4].
Was the social credit Party conservative? ›
He added a heavy dose of fundamentalist Christianity to C. H. Douglas' monetary theories; as a result, the social credit movement in Canada has had a strong social conservative tint. The party was formed in 1935 as the Western Social Credit League.
Does China's social credit system use AI? ›
Individuals on the blacklist and redlist, in turn, help the government's instructions spread by serving as role models from which others might learn (Cho, 2020, p. 7). For all of the abovementioned good and bad behaviors, China mostly relies on AI with a specific focus on facial recognition (FR).
Who controls the credit system? ›
The Federal Trade Commission (FTC) is one of many U.S. federal agencies which regulate the consumer credit system and enforce the laws related to it.
Does the government own the credit bureaus? ›
Are Credit Bureaus Government Agencies? Credit bureaus are not government agencies. They are publicly traded companies owned by shareholders. The government does not run these companies, but the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) oversee them.
What are the benefits of credit in the economy? ›
When consumers and businesses can borrow money, economic transactions can take place efficiently and the economy can grow. Credit allows companies access to tools they need to produce the items we buy.
What are the potential advantages and disadvantages for individuals and society of China's social credit system? ›
Final answer: The social credit system in China has potential advantages like improved trust and reduction of crime, but also disadvantages like lack of privacy and potential abuse of power. Whether the advantages outweigh the disadvantages depends on individual viewpoints.
What is the importance of credit system? ›
Credit reports and credit scores are markers that allow a financial institution to check your reliability for paying off the debt on time. The major importance of the credit score is thus in the risk assessment of the individual or the asset – in this case, you!
What is the social credit system simplified? ›
The system began with a focus on financial creditworthiness, similar to credit scores used in western countries, and moved on to include compliance and legal violations. The eventual 'end-state' of the system is a unified record for people, businesses, and the government, which can be monitored in real-time.
