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Social Credit System

China is now in the grip of a "digital dictatorship" of the Thought of Xi Jinping on Socialism with Chinese Characteristics in the New Era. President Xi told students at the Central Party School on 03 September 2019 to ready themselves to identify threats to party rule. "Party leaders should know which way the deer went based on movements of the grass and leaves, and to know the arrival of the tiger by the wind in the pines," Xi said. "They should use scientific methods to predict risk and to locate it and the form it takes." It is not new for the Chinese authorities to record personal information. From the Mao Zedong era, all young people had a portfolio that they can't see. Whether it is work assignment, school selection, or political review, this personnel file becomes an important part of the evaluation of individuals. However, the contents that can be recorded in the portfolio are limited and cannot be networked.

As the ruling Chinese Communist Party achieves almost total control of all forms of news and information seen by its citizens, concerns are growing that the government will soon extend its reach to people's private thoughts and actions. While military and intelligence-related topics have long been highly restricted, and anti-corruption and pro-democracy voices are largely silenced in China, the administration of President Xi Jinping has been broadening the reach of government censorship to include proactive attempts to control what people think and do most of the time.

The government had only begun to aim for total control of the internet after President Xi Jinping came to power in 2012. The watershed years were 2012, 2013, 2014, just after Xi Jinping took power. It was Xi who set up the Central Cybersecurity and Informatization Group, which he led himself, and from that point onward there was a huge sea change in policy.

The 'social credit system' (shehui xinyong tixi), currently under development assesses individuals and companies regarding their behaviour against standards defined by the Chinese government (National Enterprise Credit Information Publicity System). Sanctions or blocking the possibility to operate further in the country may result in a low social credit score. The system (potentially) makes it more necessary for any private actors operating in China to comply with Chinese rules and triggers concerns that it may influence the behaviour of companies not only inside but also outside China. Big data nay take up many of the responsibilities of the Communist Party's feedback mechanism. It is also expected to act as feedstock for the anti-corruption campaign, which has been using information about spending on wines and luxury buying for the purpose of investigations. People who are considered to be "troublemakers" by the authorities, including those who have tried fare-dodging, smoked on public transport, caused trouble on commercial flights or "spread false information" online will now be prevented from buying train tickets. The Party Central Committee and the State Council attach great importance to the construction of the social credit system. The 16th National Congress of the Communist Party of China and the Third Plenary Session of the 16th CPC Central Committee defined the direction and objectives of the construction of the social credit system. On July 16, 2019, the General Office of the State Council issued the "Guiding Opinions on Accelerating the Construction of a Social Credit System to Build a New Credit-based Supervision Mechanism".

The Social Credit System overlaps with smart cities projects and tech surveillance. Commercial social credit apps, for instance, share data with police and vice-versa. In 2001 Gregory Walton wrote : Ultimately the [CCPs] aim is to integrate a gigantic online database with an all-encompassing surveillance network incorporating speech and face recognition, closed-circuit television, smart cards, credit records, and Internet surveillance technologies.

China's financial risks are mainly caused by the rapid expansion of bank credit scale and the imperfect and unsound credit system in the process of economic transformation. China believes it is necessary to vigorously strengthen the construction of China's credit service industry in order to meet the challenges of foreign credit service companies. Standards of life, work, employment, etc. are directly linked, so that the trustworthy get all kinds of benefits, so that the untrustworthy people are eliminated by the market. The formation and establishment of such a consciousness and culture cannot be solved by simple education, but must rely on a standardized credit system.

The social credit system is also called the national credit management system or the national credit system. The establishment and improvement of the social credit system is one of the important signs of the continuous maturity of China's socialist market economy . The social credit system is based on a relatively complete legal and regulatory system; the establishment and improvement of the credit information sharing mechanism as the core; the cultivation and formation of the credit service market as the driving force; and the continuous improvement of the main competitiveness of the credit service industry; A national social governance mechanism that is guaranteed by the government's strong regulatory system. Poor credit system is a weak link in the development of China's socialist market economy and has become a prominent factor affecting and restricting economic development. The lack of sufficient credit directly led to many companies in crisis. In the face of this situation, the establishment and improvement of the credit system of the national economy has become a top priority.

The State Council on the issuance on building a social credit system Plan (2014-2020 years) notice (Guo Fa [2014] No. 21) stated that promoting the social credit system construction must adhere to Deng Xiaoping Theory and the "Three Represents". Guided by important ideas and scientific development concepts, in accordance with the spirit of the Eighteenth Plenary Session of the Eighteenth National Congress of the Communist Party of China and the Third Plenary Session of the Eighteenth Central Committee and the "Twelfth Five-Year Plan", the goals wsa to improve the credit laws, regulations and standards system and form a credit information system covering the whole society.

The key link of the personal credit system is the personal credit database. The information collection and operation mode of the database is basically the same as the enterprise database. The difference is that personal credit information collection and inquiry are subject to more legal protection.

The "credit intermediaries-led" model represented by the United States relies entirely on the laws of the market economy and the self-management of the credit management industry. The government is only responsible for providing legislative support and supervising the operation of the credit management system. In this mode of operation, credit intermediaries play a major role, and the core of their operations is economic interests. The "government and central bank-led" model represented by Europe is that the government mandatoryly requires companies and individuals to provide credit data to these institutions through the establishment of public credit bureaus. The western developed countries have adapted to the trend of market economy development, established a credit management system, formed a credit environment and credit order, and effectively promoted economic development. The perfection of the social credit system has become a prominent symbol of the maturity of the market economy. In China, the construction of a social credit system that meets the requirements of the market economy has just started. With the rapid development of China's economy and the improvement of marketization, it has objectively put forward urgent requirements for the establishment of a social credit system.

The Chinese government will monitor and guide the behavior of market participants with the corporate social credit system (Corporate SCS). Beijing will further open its market, gradually reduce hard barriers such as joint-stock ratio restrictions and industry restrictions, and instead use the soft means of corporate social credit system to strengthen control over foreign-invested enterprises in China. For foreign companies, this may be a huge opportunity, because this kind of index system theoretically treats both domestic and foreign companies equally, and in the past discriminatory policies specific to foreign companies - such as The joint stock ratio is limited - it is expected to be gradually eliminated. On the other hand, a series of strict indicators of the corporate social credit system were formulated by the Chinese government. Only in the eyes of the Chinese government, "trustworthy market behavior" can give companies a higher rating in the system.

The new system may be used by Beijing as a weapon for Sino-US trade wars. It is only necessary to adjust some indicators or modify some algorithms to lower the scores of politically unpopular foreign companies. It blocks outside the Chinese market and no longer requires complicated legislative processes.

Under the buyer's market conditions, it is a successful experience of many developed countries to expand the market size and stimulate economic growth by expanding the total amount of domestic credit transactions. In a good market credit environment, the market size of a country will increase exponentially due to the growth of credit transactions, thereby stimulating the economy and increasing employment. It is necessary to rely on the "Golden Tax" and "Golden Pass" management systems to improve the taxpayer's credit database and establish a sound record of corporate and personal evasion tax fraud.

By combining the hard numerical financial analysis familiar to many people in developed nations with an analysis of political, legal, and online activities of individuals, the Chinese government plans to issue a score that reflects what best be described as a persons trustworthiness. A high score might result in being able to rent a car without a deposit or a lower mortgage rate. A low score might result in penalties such as higher rents, fewer job opportunities, travel restrictions, and curtailed education options for an individuals children.

Chinas goal of creating a nationwide "social credit system" which would give every individual a credit score based on their financial and social histories, may be the latest tool for the Communist Party to control those who criticize the party or the government. A 2014 government document concerning the creation of a nationwide "social credit system" states that the system would evaluate individuals credit history and online activities and blacklist those "engaging in online swindles" and "rumormongering", and calls for taking measures against those blacklisted individuals. Its a way of punishing people who fall outside of what the Communist Party thinks is acceptable behavior.

By 2019 provincial and municipal authorities across China are buying large amounts of instruments, tools and medical supplies that are designed to collect DNA samples from people. Some local governments indicated that the authorities were focusing in particular on identifying male relatives and on building family trees within their database. While the majority of contracts were awarded to Chinese companies, most of the DNA instrument analyzing technology is being supplied by U.S. biotech firm Thermo Fisher. Under the old hukou system, which dated back to the Mao era of collective farming and a planned economy, each household accessed services from its place of registration, posing huge social problems for China's hundreds of millions of migrant workers and their families who had no access to schooling or medical care in the cities where they worked. The biometric collection scheme is detailed in an official document called Regional Working Guidelines on the Accurate Registration and Verification of Population," dated July 2, 2017.

Authorities have experimented with "social credit" since 2014 in areas across China. Points are deducted for breaking the law or, in some areas, offenses as minor as walking a dog without a leash. Possible penalties include restrictions on travel, business and access to education. A slogan repeated in state media says, "Once you lose trust, you will face restrictions everywhere."

By 2020, China will have completed its nationwide facial recognition and surveillance network, achieving near-total surveillance of urban residents, including in their homes via smart TVs and smartphones. According to the official Legal Daily newspaper, the 13th Five Year Plan requires 100 percent surveillance and facial recognition coverage and total unification of its existing databases across the country. Authorities in the southwestern province of Sichuan reported in December 2017 that they had completed the installation of more than 40,000 surveillance cameras across more than 14,000 villages as part of the "Sharp Eyes" nationwide surveillance network.

Guangdong-based Bell New Vision Co. is developing the nationwide "Sharp Eyes" platform that can link up public surveillance cameras and those installed in smart devices in the home, to a nationwide network for viewing in real time by anyone who is given access. "Sharp Eyes" comes from a ruling Chinese Communist Party slogan, "the people have sharp eyes," which traditionally relied on the eyes and ears of local neighborhood committees to keep tabs on what its people were up to.

China's surveillance system is expected to expand to 570 million cameras by 2020. Beijing has the technological know-how to bring that entire suite of surveillance and proactive thought control across the international immigration border to Hong Kong. US Vice President Mike Pence criticized it in October 2018 as "an Orwellian system premised on controlling virtually every facet of human life."



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Page last modified: 28-09-2019 18:50:04 ZULU