'The Confusion is a Feature, not a Bug!’

Hardly any other Chinese policy initiative has been as widely – and wrongly – covered than the “Social Credit System”. Because the year 2020 is usually cited as the year when the system would be fully operational, we took another look at social credit to debunk the most prominent myths, asked where in its development the system currently stands, and what it can tell us about Chinese society and law.

Our key takeaways

As Jeremy Daum noted, what is commonly referred to as China’s “Social Credit System”, or SCS for short, is, more than anything else, a centralized set of administrative data. Our experts liken it to an API for government data, or a user interface for administrative agencies. It is a pool of existing records to which even private app developers may gain access: Kendra Schaefer mentions that there are apps for wholesale markets that allow them to gauge whether vendors are trustworthy by looking up whether they have received a penalty for a violation. It will also allow for job applicants to find out which companies have the best track records regarding worker safety and protection.

The most persistent myth about the SCS is the existence of an actual social credit score. Underpinning this myth are, according to Jeremy, three major misunderstandings commonly propagated by Western media:

1. “The focus is on individuals” – The actual legislative focus lies on corporations, though some aspects do also target natural persons. This is evident when looking at the main data used, such as credit reporting and regulatory information – think permits and penalties.
2. “The SCS is connected to Chinese surveillance” – The assumption here is that because the Chinese government already has an admittedly vast surveillance apparatus, it will use it in the context of the SCS. But there are no indications that government bodies are pooling surveillance data. The data used in the SCS are records that have existed prior to its inception.
3. “The SCS relies heavily on latest big data technology” – The reality is, again, different. What is pooled together is mostly administrative and government data. Laws specify that this is to be done in regular spreadsheets, not sophisticated databases or applications. Little to no automation is intended, as far as one can tell from legislation and planning documents.

What may be causing confusion and concern is the third pillar (apart from credit and permits/penalties) usually dubbed ‘integrity’, which is supposed to ‘measure a citizen’s honesty’. Daum concedes that this concept is the most ‘loosey and vague’. It is important to point out, he says, that punishments cannot be based on any SCS records – they are only given for violations of law. However, it can be argued that this uncertainty, as to how all-encompassing the SCS is, is intended.

Ultimately, the intended effect of this “system” is deregulation and reducing corporate malfeasance. The idea is to have market actors self-regulate by observing each other and by being closely monitored by the public. As far as whether the goals set for 2020 have been met, both Kendra and Jeremy say most of what was planned has been implemented. However, the SCS is an ‘evolving system’ which is bound to change and may even be split into several parts later.

Jeremy Daum is a Senior Fellow of the Yale Law School Paul Tsai China Center with a principal research focus on criminal procedure law. He is also the designer and founder of the collaborative translation and commentary site Chinalawtranslate.com, dedicated to improving mutual understanding between legal professionals in China and abroad.

Kendra Schaefer leads Trivium’s tech advisory practice and is co-lead on Trivium’s social credit project. She focuses on the technical underpinnings and data collection of the social credit system. Kendra began her career in China on the production end of the tech in the early 2000s, building sites, apps, and digital platforms for multinationals entering the China market. She later moved into tech advisory, and has consulted on tech localization and policy for over 150 SMEs and multinationals.