By 2020, the behavior of every single citizen and legal person (which includes every company or other entity) in China will be rated and ranked, participating in China’s credit scores will be mandatory.
By 2020, the behavior of every single citizen and legal person (which includes every company or other entity) in China will be rated and ranked, participating in China’s credit scores will be mandatory.
On June 14, 2014, the State Council of China published a document called “Planning Outline for the Construction of a Social Credit System”.
The screenshot of the official document from National Development and Reform Commission.
In three short years, based on the government’s plan, Chinese tech giants WeChatand Alipay have already launched their own credit scoring system. A national trust scoring system exists now to rate people in China and secure them services based on the social credit score.
– A national database will merge a wide variety of information on everyone, assessing whether taxes and traffic tickets have been paid, whether academic degrees have been rightly earned etc.
Image source: WIRED
Credit scoring systems of WeChat & Alipay work in a similar way to collect data from users.
Tencent and developer of the messaging app WeChat with more than 850 million active users launched its own credit system in early August signaling that private social credit systems are alive and well.
Alipay
The other side, Sesame Credit, a financial service on Alipay. It is measured by a score ranging between 350 and 950 points and rates the online financial transactions of those using Alipay. It obtains data from its partners including the taxis services Didi Kuaidi, rating whether users bothered to settle taxi payments.
No one understands you more than data giants!
Controversially, data giants do not hide that it judges the types of products shoppers buy online.
Someone who plays video games for 10 hours a day, for example, would be considered an idle person.
Someone who frequently buys diapers would be considered as probably a parent, who on balance is more likely to have a sense of responsibility.
Another category to assess credit is interpersonal relationships. Sharing what Sesame Credit refers to as “positive energy” online, nice messages about the government or how well the country’s economy is doing will make your score go up!
Sesame has promoted the consumer benefits of a good credit score, from a prominent dating profile on the Baihe matchmaking site to VIP reservations with hotels and car rental companies.
Image source: WIRED
China’s social credit system also affects foreign business.
While many reports have focused on how social scoring will affect individuals, a more interesting aspect might be its implications for doing business in China, including foreign companies.
China’s Social Credit System has the potential to become the most globally sophisticated and fine-tuned model for IT-backed and big data-enabled market regulation.
Image source: MERICS. Tap to enlarge.
Functionally speaking, the data will be collected from multiple sources by the so-called “National Credit Information Sharing Platform” and used to generate ratings for each company.
These scores will have an immediate impact for companies incentivizing them to self-restrict their behavior by following regulations and government industrial targets.
If implemented correctly, the system will have many positive effects on China’s market, including fewer lawbreakers and more transparency.
People with low ratings will have slower internet speeds; restricted access to restaurants and the removal of the right to travel.
Penalties are set to change dramatically when the government system becomes mandatory in 2020. Indeed, on September 25, 2016, the State Council General Office updated its policy entitled “Warning and Punishment Mechanisms for Persons Subject to Enforcement for Trust-Breaking”.
Official document of the State Council General Office ” Warning and Punishment Mechanisms for Persons Subject to Enforcement for Trust-Breaking”.
The overriding principle is simple: “If trust is broken in one place, restrictions are imposed everywhere,” the policy document states.
For instance, people with low ratings will have,
slower internet speeds;
restricted access to certain restaurants, nightclubs or golf courses;
the removal of the right to travel freely abroad with, “restrictive control on consumption within holiday areas or travel businesses”;
will not be hired by certain employers and will be forbidden from obtaining some jobs.
It’s the reality every single citizen and the legal person in China will face. As the government document states, the social credit system will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step”.
Reference: MERICS, technode, bbc, WIRED
Source:HiTouch
