Home > Uncategorized > Guest post: China’s Social Credit System

Guest post: China’s Social Credit System

This is a guest post by Jianyin Roachell, Social Innovation, SAS-certified Data Intelligence Developer, US-China-EU relations.

My name is Jianyin Roachell, Chinese American and I have been researching how digital innovation and big data can impact socio-economics and political economy in China. In this guest blog, I hope to enlighten you with instances of how big data and AI may change the role of firms and governments, what is China’s National Social Credit System, and perhaps collaborations between business and governments to increase upward social mobility using big data. Allow me to make it clear, I am not promoting or degrading any Chinese social policies in this blog.

Background

To understand why I do what I do, allow me to introduce my background. I am a Chinese-born-American and grew up in Memphis, TN, the city where Martin Luther King Jr’s died and known for our civil rights movements. Memphis is notorious for the dysfunctional education system and gun-violence (two of my friends were killed). With lingering residual discriminations from Jim-Crow South and police brutality anxiety, the city of Memphis where I grew up suffered social distrust between the at-risk communities and the rest of the middle class. I really witness some of the stark contrast between upper and lower class while growing up in social the social circles. After reading Cathy’s book, “Weapons of Math Destruction”, I was inspired to pursue my passion in social innovation and digital social justice. I am currently a Master’s student studying Economics and Computer science. My background is in statistics and data analytics. My interests lie in the center of Entrepreneurship-Innovation, Socially Responsible Algorithmic Design, and data ethics.

I always wanted to travel the world, Why not go to China… I asked myself. That’s where lots of things are happening, and after all, I am Chinese. My China experience has led me through some amazing self-discoveries and also discover a few glimpses of what the future may hold within socio-economics and policy.

China’s AI

I predict that China’s AI systems and technology will surpass that of the West for two reason. Namely, the sheer size of China’s population and very ambiguous data privacy laws. Companies are building machine learning models that train on 1.3 Billion people’s personal data points. I predict that China’s AI technologies will be more accurate and more scalable than that of the West in the near future. The data privacy laws are not very established, giving companies and local governments opportunities to exploit them for unethical profit-seeking and political agendas.

The penetration of big data and algorithms.

In China, where the government plays the role of ‘parent’ culturally, it is comparable to our own upbringing: “do you not eat your vegetables properly? Then no television tonight!”

With the arrival of AI and big data, in the consumer market, firms are beginning to play the role of Mother, figuratively, while the Government is playing the role of the Father. Mothers on average give you treats to incentivize you to do something good, while dads are there to give your butt a good beating when you misbehave.

In China, consumers are sucking on the tit of business discounts and freemium products, while the government is monitoring bad behavior through a very data-driven censorship system. By 2020, China will roll out a national social credit system to quantify every citizen’s social worth in society through what they buy and how they behave. This is the socialism engineering at its finest.

Role of Firms in relations to Big data

In the US, tech companies like Google and Facebook own the user data; whereas, in China not only do the Tech Giants (Baidu Alibaba Tencent or BAT) but also The Government can access the consumer data. China is currently in transition from a manufacturing manual labor-based economy into a skilled-labor and high-tech consumption economy.

What China needs now is to really develop its credit system and open up the credit market. Inevitably, the BAT’s shopping-spree for start-ups and mergers have led to the construction China’s first social credit system. How? When BAT companies purchase smaller companies, they also buy their data access. With the huge amount of data gathered from multiple child-companies, BAT giants are able to use big-data to gamify China’s consumer market and hype up demands for products, goods, and services. This is the narrative that will define the 21st century as China finds the next chapter for sustainable growth. The construction of a national social credit system will engineer new social behavior and public ethics in an entirely different way we understand in the West.

There are different attitudes that East and West perceive AI tech. The East tend to apply AI for the common good and thinks AI can be a virtual partner or a quasi-member in society (example: Japan Society for AI book of ethics present that AI should be a quasi-member of society); whereas in the West, AI is perceived as a tool to generate more value, save more money, and increase further productivity. Because of this difference in outlook, the future of AI development may also shape how we live our daily lives in each of the West-East spheres.

Social Credit Score: Big Brother?

To understand why China is doing this, first we must understand China’s culture. With Confucianism as the nucleus of familial code of conduct, dating back thousands years of Chinese Culture, there lies the value of “the natural order between Authority and the People.” This means that it has always been in China’s DNA to trust and obey the authorities even in the ancient chinese imperial times. The western media describes:
“The worst-case scenario is a form of high-tech Stalinism for our brave new world.” But actually there are two different systems that makes up the National Social Credit Score:

1) the commercial credit system (similar to US’s FICO and German Schuffa) and

2) social management system (big-brother-like mechanism).

The commercial credit system: is suppose to measure your financial credit and how likely you’re likely to pay back your loans. Scores range from [350-950]. Loans, credit markets, and mortgage markets will be heavily dependent on this score. This score will reflect all the accumulation of all your digital purchases and how trustworthy are you. China is filled with business con-men, and this system can actually hold those bad business accountable and financially punish them before they produce bad products into the market.

Social management system: put miscreants and offenders on a blacklist, where the government will extract data from the judicial and law enforcement data-base and pass the data to Ant Financial to decrease the offenders’ commercial credit scores. The lower the credit score, the less benefits you will get from commercial digital vendors.

Socio-economic Implications and Going Forward

Dating: Because financial capacity is an important aspect when looking for a partner, Sesame Credit is also integrated into various dating sites, so that users can see the scores of their potential partner. This is not a new idea. Matchmakers in ancient times have matched couples heavily on their socioeconomic background. However, in our modern society, over time this may further solidify the classes and may even amplify the effects, where the lower-class will stay poor, and upper class will stay wealthy. This will more likely exacerbate wealth inequality as their children progress forward into their lives; thus upward social mobility will be limited. The current literature has been focusing on the “big brother” side of the Chinese Social credit system; instead the argument should be asking how big data can offer a different solution to this problem. There are so many opportunities for firms and government to work together to increase the value of the people, bring them out of poverty, and give policyholders the intelligence to redistribute wealth to the groups are most at-risk of unequal opportunity. I call this the era of “Digital Social Mobility.”

Technology can help us even up the playing field and bring equal opportunities. Please see my research poster here to learn more about this topic. I believe truly that if we put out resources together we can sparking a new movement that can redefine and reimagine the human experience in this 21st century.

Categories: Uncategorized
  1. October 2, 2018 at 8:32 am

    Interesting but fails to address the empire mentality where the inhabitants think the status quo will never change. All empires fall, as a UK citizen I know this well. Personally I think in the long term that China will have a more educated, more greedy population. This will mean that they will not be happy and there will be a good chance of social unrest leading to civil war. The country will break up into many independent areas/countries with some more affluent than others.

    Owing to its lack of ethics, “AI” will spawn many dangerous uses of control and disruption technologies that will become more threatening both in war and finance. The usual suspects such as the West, Russia and others will step into the breach and use this chaos as they always do. Although a united China might be a power house in the short run, unfortunately I think it will end in tears.

    Regards Maldwyn Palmer

    P.S. But on the bright side my grandchildren will not have to learn Chinese as we Brits are rubbish at learning other languages. We just shout louder and slower.

    ________________________________

    Like

    • JV
      October 2, 2018 at 10:22 am

      Hmmm…just injecting that piece of data/thinking into the system will surely have an impact.

      Like

  2. October 3, 2018 at 10:25 am

    AI was created by the selfsame group of people who have created inequality as a class for thousands of years. I doubt it will do anything to alleviate that problem.

    Like

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