China’s plan to judge each of its 1.3 billion people based on their social behavior is moving a step closer to reality, with Beijing set to adopt a lifelong points program by 2021 that assigns personalized ratings for each resident.

The capital city will pool data from several departments to reward and punish some 22 million citizens based on their actions and reputations by the end of 2020, according to a plan posted on the Beijing municipal government’s website on Monday. Those with better so-called social credit will get “green channel” benefits while those who violate laws will find life more difficult.

The Beijing project will improve blacklist systems so that those deemed untrustworthy will be “unable to move even a single step,” according to the government’s plan. Xinhua reported on the proposal Tuesday, while the report posted on the municipal government’s website is dated July 18.

Eoin Treacy's view

Anyone who has ever attempted to teach anything to anyone will be familiar with the experience that what you think of as important may not gel with what your presumed student thinks. As a teacher you never really know if you are getting your point across.

I was thinking about that while in Singapore last month. The country has had unparalleled success in turning a backwater into a private banking powerhouse through a commitment to improving standards of governance and rule of law. However, Singapore has also been the subject of much criticism for the strict social control policies they pursued on the way to prosperity.

China has been sending its leaders to Singapore for years to learn about city planning, management styles and governance. At least that is what Singapore thought they were teaching them. Here is a section from a New York Time article in 2007:

And this is where tiny Singapore sees itself as a model for China, the world’s most-populous country. “They’ve got to be like us,” Mr. Lee said, “with a very keen sense of what is possible, and what is not.”

Every year, he said, Chinese ministers meet twice with Singaporean ministers to learn from their experience. Fifty mayors of Chinese cities visit every three months for courses in city management.

Singapore’s secret, Mr. Lee said, is that it is “ideology free.” It possesses an unsentimental pragmatism that infuses the workings of the country as if it were in itself an ideology, he said. When considering an approach to an issue, he says, the question is: “Does it work? Let’s try it, and if it does work, fine, let’s continue it. If it doesn’t work, toss it out, try another one.”

What if the Chinese, in their drive to create capitalism in their own mould ignored the good governance lessons and instead concluded that a strict state-enforced social structure was the biggest reason the island nation succeeded and simultaneously preserved single party rule?

It seems to me that the social credit score is a mechanism to instil civility where none currently exists. Videos have been circulating on YouTube for years of people in China walking past those in difficulty, allowing children to be killed rather than put out a hand out to stop them being run over and taking photos of disasters rather than helping. The lack of fellow feeling in society is a major problem and that is particularly true outside the Tier 1 cities.

Therefore, when we think about the social credit score system there are multiple aims it is designed to meet. China is adopting a “fake it, till you make it” approach to creating a civil society but they do not seem to have paid any attention to the fact leadership comes from the top. Miming the actions of a civil person while engaging in the most egregious behaviour behind closed doors is not part of a civil society. If the rules do not apply to the moneyed classes or the Party membership, if you can bribe your way back into the social graces of the system then it will amount to nothing more than a costly and heavy-handed social control mechanism in the mould of the one-child program.  

Of course, the primary market reason for the social credit score is to ensure compliance with economic doctrine and state ideology as the Party manages growth expectations lower. China has a large population, highly leveraged property market, a slew of bad loans at is banks, a rising default rate and is simultaneously running a trade war which is putting downward pressure on the currency. The one thing the Chinese government cannot afford is capital flight. With a large deposit base in the financial sector and the ability to control large parts of the economy, the challenges facing the economy are probably manageable if they can avoid capital flight.

What I find particularly interesting is the fact some people still don’t believe China is capable of the changes needed to create such a wide-ranging Orwellian infrastructure. This article from the Brookings Institute goes into great detail about what still needs to be done and concludes it is not yet a reality but that misses the point. There is clear institutional drive to set up the social credit score system and therefore it will get done and probably faster than many people realise.

The Renminbi is barely steady as it trades above CNY7.

This article by Nisha Gopalan for Bloomberg also highlights that the oversight of any form of domestic dissent is tightening. Here is a section:

So it’s curious that the head securities regulator went to the trouble of meeting with more than 30 brokerages and fund firms to admonish them to be careful in what they say. Liu Shiyu, chairman of the China Securities Regulatory Commission, told the firms to take into account the interests of the party and the state when publishing research, Bloomberg News reported Thursday.