The Social Credit System

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It appears as if the Nosedive episode of Black Mirror is starting to become a reality in China. Everyone will have a personal score attached to them every day, and your ranking is affected by just about everything. The idea of the Social Credit System actually started back in 2014 from China's White Paper. The government essentially wanted to create a system that can evaluate not only individuals but businesses and government officials as well [1]. "Once untrustworthy, always restricted" is the main philosophy the Supreme People's Court of China runs on, which reflects the underlying objective of the Social Credit System. There are eight companies approved by the Chinese government to run pilots, but the main one is Sesame Credit [2]. Although there is the choice right now to participate in the ranking system, it will be fully implemented throughout China by 2020.

Why does China need such a system?

Currently, within China, there is no traditional credit score like the West. Without such a scoring system, the only information available to make judgments on borrowers is bank account information - which is only accessible by the bank you make deposits with. Other banks do not have access to this information, which results in them either guessing your financial abilities or not approving you for loans. Due to this lack of insight, the estimated annual economic loss is ¥600 billion [3]. Furthermore, China is aiming to increase joint rewards and punishment linked to behaviour. For example, if you don't follow the rules on trains, such as smoking in non-smoking areas or failing to purchase a ticket, it could result in you getting up to a 180-day ban from all train access [4]. The government is really trying to weed out the dishonest while honouring the faithful.

What's the bigger purpose?

Although it appears that having this system in China would be beneficial in terms of reducing economic losses linked to misjudgment of financial abilities, what really is the bigger purpose of such implementation? The government is actually trying to establish a societal norm of obedience to the State. China's government already has censorship in place to restrict the freedom of expression by its' citizens. The Chinese Communist Party (CCP) has tried to get an "equity stake [in] video companies" through holding meetings with major players in the industry through the "State Administration of Publication, Press, Radio, Film, and Television (SAPPRFT)" [5]. If successful, it would result in the CCP having more control over the content that is published to the public. Furthermore, the government already has staff monitoring and filtering comments in chat rooms to ensure they align with CCP values. VPNs are not allowed throughout the country due to their ability to override the firewall that the government has established upon its population [6]. Furthermore, "three major media outlets [had] to pledge absolute loyalty to the [CCP]" [5]. The Director of the Guangxi Normal University Press was arrested due to the organization's known opinionated publications on Chinese politics [5]. There were also multiple disappearances in Hong Kong [5]. One example was that the staff of a bookstore located in Hong Kong known to sell books on opinions about the Chinese government vanished one day, while all their IDs remained at home [5] - where could they have possibly gone? These measures and examples demonstrate how citizens must obey and agree with the stance of the CCP, so why not create a system that establishes such standards with a soft hand?

With the Social Credit System, the CCP can now:

  1. "Softly" punish the ones who disobey daily
  2. Embed concepts of "right and wrong"
  3. Ensure citizens are always subconscious of their actions

Success Story

A citizen in China who goes by the name Chen, stated that the "behaviour [of the citizens] has gotten better and better" the past few months [7]. He explains the example of stopping at crosswalks when driving. Before this scoring system, nobody would stop at crosswalks regardless of whether there were pedestrians waiting to cross the road. Pedestrians would have to essentially risk their lives to cross the street, but now it's no longer as risky to do so because if drivers don't stop at crosswalks, they will have points deducted. In the beginning, drivers were just afraid of losing points, however, now it has just become a second nature to them to stop and obey the traffic regulations [7]. This example highlights how all three of the above factors are met with the implementation of the Social Credit System.

Not only this but with the prominence of social media nowadays, citizens are also posting on social networks about how high their score is. Coupled with the benefits of having a high score, we now have citizens promoting obedience on a day-to-day basis, holding their scores as a badge of honour.

Sesame Credit


Zhima Credit and Alipay
Zhima Credit (Sesame Credit) Interface [8]

Zhima Credit (translates into Sesame Credit) is one of the eight pilots of the Social Credit System that were approved by the Chinese government. Sesame Credit is run by Ant Financial - an affiliate of the Alibaba Group. The scoring system stems from the AliPay App and uses all the data collected from this application to assign a score to each user. Scores range from 350 (lowest) to 950 (highest) - the higher the score, the better. Scores are updated on the 6th of each month, and if you fall within 600-650, you are considered an "average" person.

There are five categories of information collected as follows:

5 Categories of Data Collection by Zhima Credit.png

What can your social credit score do for you?

China's watching.png.
China's Social Credit System Inputs and Outputs [9]

Lucy Peng, an Alibaba Executive, stated that Sesame Credit "will ensure that the bad people in society don't have a place to go, while good people can move freely without obstruction" [10]. This brings into the discussion of what the benefits of having a good score are, and what the drawbacks of having a bad score are.

Some examples of benefits would be: [3] Some examples of drawbacks would be: [7]
  • Borrowing umbrellas and power banks for free
  • Scores of 600+ get:
    • Quick loans of up to ¥5000 for Taobao purchases
    • No deposits required on rentals
  • Scores of 650+ get:
    • Delayed payments of hospital services
    • VIP check-in
  • Scores of 666+ can get:
    • Cash loans of up to ¥50,000 from Ant Financial
  • Throttled internet speeds
  • Limited access to restaurants, nightclubs, golf courses
  • Removal of the right to travel abroad
  • Barred from getting into the best schools
  • Cannot get hired for the best jobs
  • Bad dating life
  • No discounts

With this list of benefits of having a good score, it appears there is a bias towards Alibaba affiliated usage. For example, the loans that users can receive are all related to Ant Financial. Furthermore, there has been a case of where a Chinese citizen returned from studying abroad to find that their credit score was only around 500 points [11]. However, after returning to China and beginning to use the Alipay app, their score gradually increased to 600 [11].

Tencent Credit

Tencent Credit is run by Tencent - the world's largest gaming company. Similar to Sesame Credit, the scoring system stems from another payment application - the WeChat Pay App. Tencent Credit launched on January 30, 2018 for public testing, but was taken down just a day after on the 31st [12]. The People's Bank of China cited concern of "marketing suspicious financial products" and "misuse of data", which resulted in the removal of the pilot [12]. However, looking at how big the technology giants of both Tencent and Alibaba are, it appears as though the government is mainly concerned about how much power they have over the population. They may potentially have more power than the CCP themselves.

Main concerns

China's Mobile Payment Market Share.png
China's Mobile Payment Market Share

As of 2017, the current population of China is at 1.41 billion people - and continuously growing. There are around 527 million citizens who use mobile payment methods [13], with a steady annual growth of around 103.5% in adoption rates [14]. With over 500 million users of Alipay and around 1 billion users of WeChat world-wide, we're looking at huge potential for control and large amounts of data collection. There was ¥81 trillion worth of third-party mobile payments in the first ten months of 2017 alone [15]. Alipay mainly dominates China's third-party mobile payments with 53% of the market share, with WeChat in second with 40% [16]. These statistics demonstrate the amount of influence these two technology giants have, as mentioned before, which lead to a major concern from the government. This makes the CCP uneasy as they now realize they should not put heavy reliance on the country's key players, as they may end up having more power than the government has.

With Alibaba stating that they only take data from the government and do not give data to them, the system appears purely private right now. However, many citizens believe the government will take advantage of the centralization of the information and end up gaining access to the data in the end through various measures. This brings up the concerns of restricted freedom and invasion of privacy, as well as a constant judgment on all actions. For example, a judge was barred from travelling due to an "insincere apology" deemed by the court [17].

In Shanghai, most citizens believe that the system is a good thing, but question who has the right to determine what's considered good and bad on their actions? [18]. Multiple citizens are concerned about how their spending may be misconceived by the scoring system, therefore translating them into a bad citizen when they are not. They believe that spending habits should not be taken into consideration, but do agree that on-time payment of bills and any government-issued violations should be [18].


To achieve China's goal in rating and monitoring its citizens, data collection and big data technology are a core element in the pilot project and future of the social credit system. Before the official rollout of the Social Credit System in 2020, the Chinese government has granted licenses to eight private companies to develop and pilot systems for the social credit scoring[3]. As of now, Sesame credit is the most prominent and adopted by opt-in users.

Current Technology

Data Collection

The system will work with a data-driven approach that gathers information such as the following: payment histories, web activities, relevant data from online databases, social media, public records, and financial institutions. Under the 2014 proposal by the State Council of the People's Republic of China titled "Planning Outline for the Construction of a Social Credit System", other technology involved would include machine-learning systems, online databases, municipal CCTV networks, and smartphones working together in a network to analyze behaviour of individuals[19].
Alibaba Group

To better illustrate how the system would collect such vast amounts of data, we turn to the Alibaba Group, the parent company behind Sesame credit. Alibaba Group is among the world's largest internet companies which operates a wide range of services in China.

According to official publication by the Alibaba Group, the Sesame credit score "Leverages big data technology and customer behaviour analytics to help make credit more available to millions of consumers across China"[20]. Sesame credit is capable of collecting the data required by leveraging analytics and data collection from the Group's portfolio of services, including over 300 million registered users and 37 million small businesses registered on among the world's largest e-commerce marketplaces such as and[20].

Sesame credit has also partnered with an online services ride-hailing company, Didi Chuxing, and Baihe - the country's most popular matchmaking service, to provide further data and analytics of its users' behaviour [3].

Aligning with the goal of discouraging unfavourable behaviour and gauge creditworthiness, Sesame credit claims to be working actively with public agencies to record past fines or crimes, and financial institutions for existing records.[20].


Alipay app user interface
In addition to the above services, central to the Sesame credit scoring is the Alipay app operated by the subsidiary, Ant Financial.

The Alipay app provides the following services:

  • Making store payments by scanning a QR code [21]
  • Paying for public services – examples such as electricity, gas, or internet bills through the City Service section[1]
  • Payment processing services - similar to Mastercard and Visa
  • Peer to peer banking – allowing transfer of money between users [22]
  • Digital ID storage – users can upload digital documents which they can access through the app [23]

The information gathered through the app includes payment histories, location, financial situation, and shopping habits.

Sesame Credit's 5 Metrics

Following the understanding of where Sesame credit will gather its information needed to rate users, the data is then analyzed by "complex algorithms" to generate the score [20]. Specifics regarding the algorithms are a corporate secret. Below are the 5 metrics that factor into generating the score.

Credit History

The first factor takes into account the users' payment histories, such as credit card repayments, utility bill payments (electricity, phone, etc.), and other payments or indebtedness through Alipay services [20][3]. These are all features that can be accessed through the Alipay app and payment services.

Behaviour and Preferences

Secondly, this factor will use analytics data from Alibaba Group's platforms and services to assess the user's character. An example of this includes online behaviour such as time spent online or on video games [20]. Li Yingyun, Sesame Credit's Technology Director explains: "Someone who plays video games for ten hours a day, for example, would be considered an idle person" [3]. In addition, product categories the users shop for will also help determine the characteristics of the user. For example, someone who often buys diapers is most likely to be a parent which is linked to a responsible character[3].

Fulfillment Capacity

This factor looks into the user's ability to fulfill contract obligations by looking at their past histories. The supporting information would include looking at the financial products, services, and account balances under their Alipay account [20][3]. These data points help determine the user's risk and financial information.

Personal Characteristics

To determine the accuracy of the user's personal information, Sesame Credit will also examine the person's home address, length of time living there, mobile phone numbers, and length of time using the same phone number [20][3]. These attributes can also help establish trustworthiness.

Interpersonal Relationships

The final factor focuses on the user's online characteristics such as interpersonal relationships and behaviour. The system analyzes the user's friends to see who the user associates themselves with and their choice of "quality" of friends. In addition, the online interactions between the user and their friends are also considered in the scoring[20]. Given an example, sharing "positive energy" and nice messages online and sharing how well the government or economy is doing could make the user's score increase. Meanwhile, sharing opposing or negative political opinions would lower the user's score; this also includes when a related friend posts them, so the user's score is also dragged down[3].

Future Technology

Surveillance Systems

In order to better manage, monitor, and rate the citizens within the Social Credit System, the Chinese Government plans to implement a surveillance system which includes three critical components:

  1. Surveillance Cameras
  2. Facial Recognition
  3. Smart Glasses


CCTVs deployed across China [24]

China will use CCTV Cameras as the main tool of the surveillance system. Currently, there are 170 million CCTV cameras across the country and by 2020, China plans to install a total of 626 million CCTV cameras [25][26]. This means that there will be essentially "one camera for every two [Chinese] citizens" [25]. The network of all these surveillance cameras will keep track of citizens’ movements with the intent to manage the behaviours of the citizens, especially in the public environment.

Facial Recognition

Facial recognition surveillance [27]

Since 2017, facial recognition technology has become popular within China. Previously, facial recognition was used to recognize the faces of people during hotel check-in, or at point-of-sales in stores. Now, the Chinese Government will use this technology to track and identify the faces of the country's 1.4 billion citizens in under three seconds [28]. The purpose of this is to help the Social Credit System – that is, to improve the accuracy of assigning scores for the citizens by monitoring and keeping track of the citizen’s behaviours.

The facial recognition system will connect to the surveillance cameras installed around the country. The Government will collect a large amount of information through these cameras and can recognize every person, bike, car, bus and so on. As people or vehicles pass in front of the cameras, identifiers will almost instantaneously pop-up. SenseTime CEO Xu Li said that this technology "can recognize more than 4000 vehicles... and can [distinguish] between an adult, a child, male or female", and ethnicity [29].

This technology is used to manage the behaviour of citizens and to prevent inappropriate behaviour. For example, facial recognition has the ability to scan crowds for a person of interest. If anyone commits a crime, such as jaywalking, the facial algorithms will match the video footage of that person’s face to his/her photo in a National ID Database. The system may also zoom into their faces and shame them on public video screens [30]. The information may be sent to their employers, and this can be considered a punishment for them. A Chinese artificial intelligence company will be partnering this system with mobile carriers. With their partnership, the offenders will receive a text message with the penalty once they are caught [31]. This may or may not be a monetary punishment. For more serious situations, the police may go directly to the offenders’ house [31]. Currently, the technology is being experimented in "sixteen cities, municipalities, and provinces [in China] with an accuracy rate of 99.8%"[32]. Facial recognition has proven itself to be successful as within the past two years, more than 2000 people have been arrested for violations identified through this technology [32].

Smart Glasses [33]

Smart Glasses

With the advancement of surveillance cameras and facial recognition in Beijing, police have reportedly been implementing the use of Smart Glasses. Smart Glasses have a powerful built-in function of Facial Recognition that is linked to the government's national database, which can then be used to track and identify faces [29]. With this technology, the police will find the process of identifying law-breakers more efficient and effective. Currently, Smart Glasses are being tested within China and it is reported that the technology "could identify faces from a database of 10,000 suspects in 100 milliseconds" [34].

Challenges and Concerns

While the technology of Surveillance Cameras, Facial Recognition, and Smart Glasses may encourage citizens to follow the rules, predict crime, and capture criminals, these technologies might pose a new threat to the freedom of expression. Although the technology promotes the wellness of society as a whole, the use of those technologies can be oppressive and poses a huge threat to the privacy of Chinese citizens.

Privacy Concerns


A potential concern would be hackers compromising the system. Unauthorized access to the Social Credit System's database could allow the perpetrators access to more information about an individual than ever imagined. Given the information that the system such as Sesame credit has access to, information such as location data, addresses, ID documents, and financial information could be at risk.

Potential to affect people's futures

With a social credit system, a person's past activity and behaviour would be tied to a single number. People that may have made mistakes in the past could be carrying the burden through the future through a lower score. We find this to be an issue for individuals who may want to improve their lives and to move on from past mistakes.

Hu Tao, Sesame Credit's chief manager has disclosed that they have approached China's Education Bureau to share the list of students caught cheating on national examinations, to make them "pay into the future for their dishonesty" [3]. In another article, she supports that the fraud should become a "blight" on their Sesame records [1].

With these records kept throughout the lives of individuals, one could foresee that it would be incredibly difficult for people who want to start anew and climb the social ladder to make progress as a low score also prevents those people from obtaining better education or jobs. Therefore, there could be a consequence of creating even greater income/social gaps.

Data Protection Regulations

Under China's data protection regulations, private businesses have to turn over their data to the government. This poses a threat to the privacy of the users and citizens as the government could tap into the social credit databases and monitor data whenever it wants.

One notable example is China's most popular messaging app, WeChat. In 2017, the updates to the app's privacy policy stated that various log data from users will be collected and retained to comply with applicable laws or regulations. Since China's law enforcement agencies do not require search warrants to seize private property or data, the new policy essentially translates that China could access WeChat's user data at any time.[35]

Machine Bias

China's Social Credit System Explained: The Good, The Bad, And The Unknown [36]

The next major concern comes from the issue of flaws in algorithms and machine learning. One proposed problem is machine-learning and algorithms entering into a feedback loop of flawed data when trying to analyze data points supplied the by the data collection [1]. For example, the algorithm could be misunderstanding certain behaviours, tagging users with negative traits, thus lowering their scores.

Moreover, the decision making for algorithms and machine-learning would be calibrated to the creator's moral compass. One question is whether it is fair to judge people on the designer's point of view on what's right or wrong.

The following video demonstrates interviews with Chinese citizens and users about their thoughts on Sesame credit. One citizen is concerned about his score being lower due to buying many snacks for his restaurant business.

Black Markets

With the nature of the social credit system, with benefits being granted to higher scoring individuals, it isn't difficult to speculate an emergence of black markets. With these markets, it may be possible for individuals to pay to manipulate their scores. As a result, they could boost their scores to gain the incentives that come with higher scores or even sabotage other's scores. This could be similar to Facebook likes or Twitter followers being bought[2].

This issue is also closely related to the hacker problem since a secure system would make it impossible to gain access to into the database to manipulate scores.

Data Management

A technological challenge of the Social Credit System may be the government's ability to store or process all the data collected from its citizens. According to Cisco, in 2016 the average global internet traffic per capita per month was about 10 GB, which amounts to 0.33 GB per day[3]. At around a population of 1.41 billion, and assuming the proportion of residents above 15 years old will be taking part in the system, this will amount to 1.41 billion * 83.3% = 1.17 billion people[4]. Multiply 1.17 billion and 0.33 GB gives approximately 386,100,000 GB of data that needs to be stored and processed per day. In addition to the current estimates, Cisco estimates that the internet traffic per capita will be 30 GB per month by 2021 when the Social Credit System is proposed to be already fully functional. The technological challenge and the costs of keeping up with all this data will be significantly high.

Business Implications

Positive Implications

With the Social Credit System being readily accessible by users, there are implications that go beyond just the users themselves. Businesses can now create personalized services for users upon arrival as the score provides insight into what the customer can afford financially. It also indicates where they essentially "stand" in society, and it allows lenders to have a better perception of the financial position of its customers. Furthermore, the social credit scores can lead to increased customer loyalty for brands that are associated with "good" behaviour. This means that organizations will strive to create better products and "do good" in society in order to be classified as a positive company to make purchases from. In addition to regular business loyalty, it also leads to increased dedication to Alibaba's platform currently, as Sesame Credit pulls a lot of its information from its own company alone - from the Alipay app to spending habits on its e-commerce platforms. With increased loyalty comes increased revenues.

Negative Implications

Although there are positive implications, there are also some consequences of this scoring system. Some companies can lose out on a lot of business if customers aren't "approved" due to their scores not meeting a certain threshold. For example, in the transportation industry, there are around "11 million people [blacklisted from buying flight tickets, and] 4.25 million blocked from high-speed train" tickets [5]. Although these numbers seem minuscule when compared to the entire population of China, if you multiply the number by the revenues that could have been made per ticket, we are looking at huge losses exceeding millions of dollars. To delve a little deeper, being banned from high-speed trains still results in low-speed train tickets sales, however, if you look at the profit margin, it is lower. Why? Because you can't sell more products to the riders as they don't have access to exclusive services available on the high-speed trains. You can't sell them expensive beverages or offer luxury add-ons to their train experience. You can only offer them the bare minimum, which results in lower revenues per customer.

The start of this system doesn't only affect local businesses but invokes controversy and fear for foreign companies. Foreign companies were required to obtain an "18-digit unified social credit code" upon operation in China [6]. This would assist in docking points for violations that are reported. Furthermore, airlines were forced to adopt the political stance of the CCP and list Hong Kong and Taiwan as part of China rather than independent states, or else it would go on their company's credit history [6]. This results in all companies making decisions carefully because of the extremely high risk of losing the entire Chinese market segment upon "disobedience."

The system also goes beyond the borders of China. Citizens with a score of 700+ and 750+ can enjoy streamlined Visa applications with less document verification for Singapore and Luxembourg respectively [7].

Comparison to the West

The social credit system is often compared to and based on the Western model of credit scores to be as the "de facto reputation index" for individuals. There are many similarities to how they both operate and in the consequences that reflect the individual's score. Other examples of similar social occurrences will be discussed.

Before Credit Scores

Before the existence of credit scores in the west, lending decisions were made by loan officers. These decisions were often subjective, based on individual judgment and therefore not always accurate. Estimates of the applicant's ability to pay were based on word of mouth - such as gossip from landlords, neighbours, local grocers, and behaviour. Discrimination was also a problem when applying for a loan, as there were issues with gender and race bias by the loan officers[8].

Before the implementation of the Social Credit System, China was also facing a problem of inaccurate lending decisions due to the lack of information as evidenced by the annual economic loss of approximately ¥600 billion.

Example of a Credit Score model

Credit Scores

The first form of credit scoring was invented in the 1950s by statisticians Bill Fair and Earl Isaac who made correlations between which "behaviours were good credit risk or bad credit risk"[8]. In the 1970s credit scoring became much more prevalent, and the current version of the FICO score came in 1989 based from the three credit bureaus in the United States, Equifax, Experian, and TransUnion[8].

A credit score is three digit number ranging from 300 as the lowest to 850 at the highest. It represents the individual's credit risk, or probability they will pay their bills on time[9]. The score aids with a more objective approach at determining financial decisions, such as interest rates on mortgage loans, or whether the individual should be given a loan.

Among the different lenders and credit bureaus are different scoring models with different formulas used, in an effort to be more competitive. Lenders who are more accurate at predicting their customers are less likely to lose money to people who default [8].

Similar to the social credit system, there are several factors that are used to determine a person's credit score[10]:

  • Payment history - missing or late payments
  • Types of credit accounts - revolving debt, installment loans such as mortgages, auto loans, student loans, personal loans
  • Collection notices - receiving notices may reflect negatively on the credit score
  • Ratio of debt to credit limit - lower debt to credit ratio is preferred because it may show lower credit risk
  • Length of credit history - a longer history provides more long-term information
  • Frequency of applying for credit - opening multiple credit accounts quickly could indicate taking on lots of new debt

With the Western credit score, also comes consequences and benefits that reflect the individual's score. For example, scores can determine where one could rent, find a job or educational opportunities, and even type of transportation. This is because a lower score locks people out of the opportunity to get better loans or even the ability to rent certain residences.

Rating Everything

Despite the controversy of rating and monitoring citizens through the social credit system, the prevalence of rating applications exist even in the west such as restaurants, movies, books, and even doctors[2]. We see these in the form of applications such as Yelp, Rotten Tomatoes, or RateMDs.

Skeptics of the social credit system such as Rogier Creemers, a post-doctoral scholar specializing in Chinese Law at Leiden University compares the system to "Yelp reviews with the nanny state watching over your shoulder"[2], a daily life Yelp but with "Big Brother" watching and rating its citizens instead. His works include a comprehensive translation of China's 2014 publication "Planning Outline for the Construction of a Social Credit System".

Social Media Analytics

Another concern with the similarities to the West stems from the availability of facial recognition already implemented through Facebook. With the new technology, it analyzes photos that friends post, yet can identify individuals even if their face is hidden as it builds on information from past photos by analyzing common physical characteristics to look for clues[11]. Therefore it can sort related pictures of people in the same events and tag friends even if their face is obstructed.

Technologies like these can feel like "crossing the line where helpful becomes creepy" as it can identify people in many ways. It is also possible police and government could use these technologies to track locations and behaviours [11], in a way that seems very similar to what the social credit system is proposing.

Background Checks for Travel

In a program that also concerns the privacy of individuals is a proposal by the PreCheck program by the US Transportation Security Administration. The Precheck program is designed to allow travellers get through checkpoints faster and with less screening required. They are able to keep their jackets or shoes on and leave laptops or small liquid containers in their carry on bags during the process[12].

In 2015, a proposal was made to extend the ability for private companies doing background checks for participants in the program to include social media postings, location data, and even purchase histories[13]. This was in addition to criminal records and other publicly available information. Although the proposal was withdrawn, this was a step into privacy issues that was eerily similar to the social credit system - more "trustworthy" people gaining benefits and convenience at the cost of privacy.

Pros and Cons


Individual Perspectives

The Social Credit System involves the improvement of personal credibility and trustworthiness of all 1.4 billion Chinese citizens. In addition, it will benefit the citizens who didn't have a bank account before, while also assisting with job search.

To start, the Social Credit System brings great opportunity for those who lack a traditional banking history. For example, farmers or citizens in rural regions who don't have regular access to banks wouldn't have been able to get loans from financial institutions before. However, now, the banks can lend them money if they have a good social credit score. The presence of such a score benefits both parties – the businesses that lend the money to people, and the borrowers as well. For the lenders, they will be able to better estimate their lendees ability to repay the debt. Financial institutions will prefer to lend money to those who have a high chance of repayment and proof that they can return the amounts borrowed. As a result, it creates an incentive for most citizens to improve their scores by following the law, repaying debt and bills on time, demonstrating appropriate behaviour, and so on. This, in turn, will improve the wellness of society as a whole.

The Social Credit System will also be able to help citizens who have a decent credit score to find jobs successfully. Having a high social credit score will essentially act as a resume and be seen as an expedited criminal background check.

Business Perspectives

The Social Credit System is considered an effective "tool to control [and regulate] market and political behaviours" [14]. It will "strengthen transparency... and [promote] socially and environmentally responsible behaviours" [15]. The Social Credit System will also hold government officials accountable. From a business standpoint, if a company follows the policies and political stance set out by the CPP, it will have a higher rating. With the higher rating, the company will receive benefits such as paying lower taxes or having a better chance to apply for new loans to help expand their organization [15].

Another advantage of the Social Credit System involves the positive effects on China’s technology development. The Social Credit System opens up development for real-time data monitoring technologies [16]. E-commerce platforms with automobile, transportation, and logistics industries can provide real-time data which helps in assigning scores and rating businesses [16]. To conclude, the Social Credit System "creates new markets for advanced IT technologies, ranging from traffic monitoring and image recognition to satellite navigation systems" [16].


Individual Perspectives

While the system provides incentives for people to engage in good behaviour, there are considerable problems associated with privacy concerns and ethics.

Behaviour and Preferences is one of the five categories that determine a citizen's social credit score [17]. The main focus of this category is to monitor the spending behaviour of its citizens. Citizens will be scored based on what they buy every day such as a knock-off or low-quality item, as well as the amount of time they spend on the Internet or playing games. However, these habits can be misunderstood. For example, a person who works in the gaming industry might need to purchase lots of video games for research or other related requirements for his/her work. The Social Credit System may perceive this person as lazy and assume he plays games every day, but in fact, they are not. Some people believe this is an intrusion on personal privacy. Who are you to judge what I do with my time and money?

The score of a citizen might be reduced because he/she buys a knock-off or low-quality product. This raises the question concerning values and perceptions. There is a lot of controversy over who gets to judge what's good and bad without knowing the context. Cultural differences also need to be taken into consideration, as what is seen as good for certain people might not be seen as good for others. Turning back to the example, is buying low-quality products really all that bad? What if the reason why a person might buy a low-quality product is because of the fact that he/she could not afford to buy better quality products due to their financial circumstances? On the other hand, by buying the cheaper products, they may be supporting unethical labour practices or IP theft. If the main goal of the Social Credit System is to measure the credibility and trustworthiness of the citizen, should the score be only based on the whether the citizen pay taxes and bills on time, or should it be based on the shopping behaviour as well?

Interpersonal Relationships is another one of the five factors that determine your social credit score [17]. This factor takes into account that if your friend has low score, your score will be lowered as well from association with this person [2]. Therefore, the only way to protect your score is to “unfriend” this person, which could put a lot of unnecessary social pressure on many people. This might even lead to depression and social isolation. It is highly questionable as to why people should be judged this way. Why does a score dictate who is a good person and who is not? Is the score always accurate in depicting the personality of a citizen after taking into account all social circumstances? Should the Government even use the data about friends and relationships to determine a score?

Other situations that might be a problem as well involves the issue of when you are a victim of unexpected financial scams. For example, if a person is scammed into unexpected debt, who is to blame? From what we understand of the system so far, the victim will receive a lower score, which seems to be extremely unfair.

Business Perspectives

The first disadvantage of the Social Credit System from a business standpoint is the obstacle with new technology. As the Social Credit System will run on an entirely new platform with new infrastructure it poses a big challenge for implementation and embedment into business practices. Together with the emergence of new ways to control data quality and to assess huge sets of real-time data using surveillance cameras or facial recognition, the amount of data a business will be required to handle may be overwhelming. The second drawback for businesses is the risk for protection of data. Specifically, breach of data, theft, hackers, or data leaks could be major concerns for protecting the data within the system. Companies should be careful in what data they share and will need to have a backup plan to move forward if any problems arise. The final disadvantage of the credit system from a business perspective is the cost of collecting, analyzing and checking the data. As the Social Credit System develops further into the future, the size of data to be collected, controlled and analyzed will increase. With all of these new technologies aforementioned emerging, the cost for interpreting and controlling the data set accurately will certainly increase as the years go by and the population continues to grow [18].


Big Brother is Watching.jpg
Big Brother is Watching You [19]

At first sight, China appears to be acting like Big Brother in George Orwell's Nineteen Eighty-Four. Within Orwell's novel, Big Brother is the leader of the totalitarian state of Oceania and established mass surveillance across the entire population, consistently reminding them they are being watched [20]. The plot of Nineteen Eighty-Four essentially parallels the Chinese Communist Party through what state the Social Credit System is currently in, and what is striving to become. As mentioned in this wiki page, the CCP plans to have one surveillance camera for every two citizens and intends to embed this surveillance system into the Social Credit System to constantly monitor its citizens' actions. The CCP is being personified as Big Brother by using its government power to implement this scoring system to establish its authority over the entire country.

It appears as a very foreign and unnecessary tactic to control citizens. However, with thorough research, the system intends to create a positive impact on behaviour and is even comparable to the Credit Scores present in the West. The West already has a rating system in place, whether it be through transcripts, credit scores, Yelp or Google Reviews. The only difference is that it does not seem as obvious to us on a daily basis that we are being ranked constantly, and how it does affect where we go in life. So is the Social Credit System really foreign and all that bad? Don't you think businesses will be less inclined to scam its customers and more inclined to create good quality products and boost customer satisfaction? Don't you think society will be less inclined to do harm unto others if they knew that any move would result in a poor reflection of themselves? With such questions, the Social Credit System still remains as a controversial topic and as something everyone should keep an eye out for in the years leading up to 2020. It will be interesting to see whether or not Alibaba's Sesame Credit still stands as a private scoring system, and whether or not the Chinese Government decided to create their own system without the help of the big two technology giants of Alibaba and Tencent.


Matthew Lee Liz Yeung Thanh Le
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada


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  6. 6.0 6.1
  8. 8.0 8.1 8.2 8.3
  11. 11.0 11.1
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  16. 16.0 16.1 16.2
  17. 17.0 17.1
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