A recent episode of the Netflix series “Black Mirror” envisions a near-future society dominated by a ubiquitous social rating system. Positive reviews from mundane social interactions can lead to a prestigious job, a luxury apartment, or an upgrade to first class. Being panned can trigger a downward spiral and excommunication from the mainstream. For many Western viewers, this sci-fi parable may have channelled fears of privacy overreach by social media giants. Chinese viewers, by contrast, might perhaps not have noticed that the program was in any way futuristic or fictional.
In 2015, the People’s Bank of China (“PBoC”), China’s central bank, offered leading technology firms the opportunity to trial innovative solutions to a chronic problem facing the country’s expanding consumer class: a lack of reliable credit scoring. Without an objective means of proving their creditworthiness, consumers in developing countries can often face serious challenges obtaining loans for major purchases, such as homes or vehicles. Alipay, a payments division of retail giant Alibaba, which counts over 520 million users, has so far led the sector with “Sesame Credit.” Tencent, the owner of popular social apps WeChat and QQ (which boast a combined 820 million regular users) has been close behind with “Tencent Credit.” Whereas traditional credit scores primarily assess an individual’s record of loan and credit card repayments, these new “social” credit scores cast a much wider net, analysing consumers’ social networks and tracking their individual behaviour to build a score based on broad concepts of honour, security, wealth, and consumption.
Highly rated users receive attractive perks, such as deposit-free apartment rentals in Shenzen, access to private networks for using WeChat on the metro, free Mobike bicycle rentals, or VIP membership to a dating app. By contrast, users with a low rating have in some cases found themselves barred from rail travel.
Since its introduction in 2015, Sesame Credit has rolled out to millions of Alipay users. The broad scope of such trial initiatives to date has been due in large part due to the country’s patchwork of data privacy regulations, which are unevenly enforced. Sesame Credit – with the PBoC’s oversight – was able to access the personal information of Alibaba and Alipay users and assign them a credit score without obtaining their consent, although the company claims that it did not share users’ personal information with government authorities. The lax attitude of the government and central bank may be changing. In early February, Tencent succumbed to government pressure and froze development on Tencent Credit. Meanwhile, the PBoC has refused to give final approval to Sesame Credit and authorise a wider launch. A new cyber security law, set to take effect on May 1, 2018, contains restrictions on the use of “sensitive” personal information, such as a person’s name, address, telephone number, date of birth, identity card number and biometric identifiers.
At first glance, it may appear that the Chinese government is taking concrete measures to protect its citizens’ personal data, and to rein in the social credit ratings providers who also deal in financial products (such as Alibaba). A closer look reveals that the current clampdown on social credit providers may be driven by another priority: Namely, the government’s rollout of its own social credit rating system by 2020. With the stated aim of “providing the trustworthy with benefits and disciplining the untrustworthy,” the state system will go a step further than the private solutions, punishing citizens who dodge bus fares or parking fines with restrictions on employment and travel.
