The Game of Life: Visualizing China’s Social Credit System

In an attempt to imbue trust, China has announced a plan to implement a national ranking system for its citizens and companies. Currently in pilot mode, the new system will be rolled out in 2020, and go through numerous iterations before becoming official.

While the system may be a useful tool for China to manage its growing 1.4 billion population, it has triggered global concerns around the ethics of big data, and whether the system is a breach of fundamental human rights.

Today’s infographic looks at how China’s proposed social credit system could work, and what the implications might be.

The Government is Always Watching

Currently, the pilot system varies from place to place, whereas the new system is envisioned as a unified system. Although the pilot program may be more of an experiment than a precursor, it gives a good indication of what to expect.

In the pilot system, each citizen is assigned 1,000 points and is consistently monitored and rated on how they behave. Points are earned through good deeds, and lost for bad behavior. Users increase points by donating blood or money, praising the government on social media, and helping the poor. Rewards for such behavior can range from getting a promotion at work fast-tracked, to receiving priority status for children’s school admissions.

In contrast, not visiting one’s aging parents regularly, spreading rumors on the internet, and cheating in online games are considered antisocial behaviors. Punishments include public shaming, exclusion from booking flights or train tickets, and restricted access to public services.

Big Data Goes Right to the Source

The perpetual surveillance that comes with the new system is expected to draw on huge amounts of data from a variety of traditional and digital sources.

Police officers have used AI-powered smart glasses and drones to effectively monitor citizens. Footage from these devices showing antisocial behavior can be broadcast to the public to shame the offenders, and deter others from behaving similarly.

For more serious offenders, some cities in China force people to repay debts by switching the person’s ringtone without their permission. The ringtone begins with the sound of a police siren, followed by a message such as:

“The person you are calling has been listed as a discredited person by the local court. Please urge this person to fulfill his or her legal obligations.”

Two of the largest companies in China, Tencent and Alibaba, were enlisted by the People’s Bank of China to play an important role in the credit system, raising the issue of third-party data security. WeChat—China’s largest social media platform, owned by Tencent—tracked behavior and ranked users accordingly, while displaying their location in real-time.

Following data concerns, these tech companies—and six others—were not awarded any licenses by the government. However, social media giants are still involved in orchestrating the public shaming of citizens who misbehave.

The Digital Dang’an

The social credit system may not be an entirely new initiative in China. The dang’an (English: record) is a paper file containing an individual’s school reports, information on physical characteristics, employment records, and photographs.

These dossiers, which were first used in the Maoist years, helped the government in maintaining control of its citizens. This gathering of citizen’s data for China’s social credit system may in fact be seen as a revival of the principle of dang’an in the digital era, with the system providing a powerful tool to monitor citizens whose data is more difficult to capture.

Is the System Working?

In 2018, people with a low score were prohibited from buying plane tickets almost 18 million times, while high-speed train ticket transactions were blocked 5.5 million times. A further 128 people were prohibited from leaving China, due to unpaid taxes.

The system could have major implications for foreign business practices—as preference could be given to companies already ranked in the system. Companies with higher scores will be rewarded with incentives which include lower tax rates and better credit conditions, with their behavior being judged in areas such as:

• Paid taxes
• Customs regulation
• Environmental protection

Despite the complexities of gathering vast amounts of data, the system is certainly making an impact. While there are benefits to having a standardardized scoring system, and encouraging positive behavior—will it be worth the social cost of gamifying human life?

China’s economic surge is one of the biggest stories of the 21st century.

Hundreds of millions of people have been lifted out of poverty, and China’s swelling middle class has attracted the interest of Western companies.

As many American companies have discovered, doing business in China is far from straightforward. Recent history is littered with examples of companies that entered the Chinese market to great fanfare, only to retreat a few years later.

Calling Off The Offensive

Today’s infographic highlights 11 companies that ended up tapping the brakes on their ambitious forays on the other side of the Pacific.

Then, we take a look at the factors that influenced these strategic withdrawals.

Here are some high profile examples of corporate u-turns by American companies operating in the Chinese market:

Google

When Google China’s search engine was launched in 2006, the company had made the controversial decision to censor search results within the country. Google publicly displayed a disclaimer indicating that some results were removed, which created tensions with the Chinese government.

For a while, things seemed to be going well. Even though a domestic company, Baidu, had captured the majority of the Chinese search market, Google did have a respectable market share of about 30%.

Google China’s fortune took a turn for the worse in 2010 after a major hack – Operation Aurora – exposed user data as well as intellectual property. The hack, which originated from within China, was the last straw for Google’s executive team. After one last ditch effort to provide unfiltered search results within China, the company retreated beyond the firewall.

Amazon

Amazon was an early entrant into the Chinese market. In 2004, the company acquired Joyo – an online shopping site – which was eventually rebranded to Amazon China in 2011.

Amazon China achieved some early success hitting a market share of around 15%, but today, that market share has eroded to less than 1%. Facing nearly insurmountable competition from domestic e-commerce platforms like JD and Taobao, the company recently announced it would be exiting the Chinese market.

Uber

After arriving fashionably late for the ride-hailing party in 2014, it quickly became clear that Uber was facing an uphill battle against well-funded domestic rivals. After only two years, Uber elected to u-turn out of the Chinese market.

Though Uber’s tactical exit from China is often viewed as a failure, the company has earned upwards of $8B through its sale to competitor Didi Chuxing.

A Two-Way Street

Now that red-hot growth at home is beginning to taper off, a number of Chinese companies have begun their push into other markets around the world. Much like their American counterparts, brands pushing beyond China’s borders are seeing varied success in their expansion efforts.

One high-profile example is Huawei. The telecommunications giant has been making inroads in countries around the world – particularly in emerging markets – but has seen pushback and scrutiny in a number of developed economies. Huawei has become a lightning rod for growing concerns over government surveillance and China’s growing influence over the global communications network.

Already, Australia has blocked the company from participating in its 5G network, and in the United States, government agencies are banned from buying Huawei gear.

If negative sentiment continues to build, it remains to be seen whether Huawei and other Chinese companies will follow the playbook of American brands in China, and turn the car around.