Author Archives: Flora Sapio

A Timeline of China’s Social Credit System

In what senses can social credit be understood? As explained here, social credit can be understood in two different senses. 
 

It is a “new mode of governance that recombines law and governance, and the public and private spheres in new and hybrid ways that will likely transform the structures and principles on which legal, governance, and societal regulatory systems are now understood and through which they acquire their legitimacy”.

But, it is also a “specific project of the Chinese state to create a comprehensive legal and regulatory mechanism.” 

 
The timeline below presents a short history of the project launched by the Chinese state to integrate diverse regulatory systems under the aegis of state-driven regulation.

Social Credit Weekly News Summary – 3rd July 2017

Welcome to this week’s edition of the News Summary at China’s Social Credit System – A Collection of Documents blog. As part of the joint project launched by the Coalition for Peace and Ethics and the Foundation for Law and International Affairs, this post brings you the three most important developments in the social credit system  that occurred from 26th June to 2nd July 2017. 


Hebei Province holds public consultation on social credit

After the Shanghai Regulations on Social Credit (上海市社会信用条例 Shanghaishi shehui xinyong tiaoli) were issued last week, more provincial governments are preparing to issue comprehensive local legislation. This week, Hebei Province will hold a public consultation to solicit opinions on the “Hebei Regulations on Social Credit Information”. The consultation will be held on 6th July. The deadline to apply for attendance expired on 2nd July  [read more here]



According to Xinhua, more local governments are adopting legislation on public officials integrity records. In discussing legislation enacted by Suqian Municipality (Jiangsu Province), Xinhua commented that: “the construction of an integrity system for public officials is an important step in strengthening the construction of an integrity system in public administration, and in improving an important aspect of social credit.” Government regulation of public officials’ behavior is not new. It is of the governance aspects being integrated in the social credit system.  [read more here]


As part of their efforts to construct a social credit system in the field of commerce, the Ministry of Public Security and other seven ministries are launching a special action against fake health and beauty products. As reported by Xinhua, according to Jin Xiaotao, comprehensive management and systems building should be strengthened, to encourage social capital and medical institutions to provide better medical and beauty services to society. Government supervision should be strengthened with the adoption of innovative means, such as the creation of punishment blacklists, to strengthen self-regulation by the health and beauty industry, and promote its healthy development. 
[read more here]

Social Credit in China and in The West: Where’s The Difference?

Social Credit in China and in The West: Where’s The Difference?

Thoughts on ‘Monitoring, Assessment, and Reward’ 

Convex Bagua (Eight Trigrams) Mirror 


In 2012, a few years before the words ‘China’s social credit system’ became a staple of the media discourse on China, I authored an academic article (in this book) where I traced the origins of China’s monitoring and governance techniques, explaining why none of the techniques adopted as part of the efforts to construct a social credit system is really new. 

During a presentation delivered at a workshop held in Shanghai on June 8, 2017 (slides available here), Larry Catà Backer made a very similar argument. Therefore, in this post I present some further thoughts on whether the social credit system is unique to China, and social credit systems operate in the West. 
It is not by chance that these questions were the first questions to be addressed by the presentation. 

The reason why I am commenting upon them depends on the fact that these are the only two questions about China’s social credit system to which an immediate answer can be provided. The question as what value the social credit system has for Chinese or Western society, as well as other questions asked during the presentation, are in my opinion open for debate. The direction such a debate will take, as well as the findings the debate will generate are, in a sense, predictible.

The Uniqueness and Ordinariness of Social Credit in China

As debate on social credit in China is starting, it is already possible to answer both these questions in the affirmative: yes, the social credit system is unique to China but, social credit systems operate in the West too. But…isn’t there a logical contradiction between the first and the second proposition? Well, classical logic books are not the real world after all, and the social credit system is dense with complexities we are just beginning to understand. Trust me, there is no contradiction.


The social credit system is unique to China… 

The uniqueness of social credit is not in the fact social credit is a policy of the Chinese Communist Party. The peculiarity of the system lies in its structure, not in its ideology. Each one of the governmental elements of social credit has been operating in Western countries at least since the 1970s, if not before. Each one of these elements has become a normal part of how government and public administration function, how private enterprises operate on markets, how judicial organs decide the cases brought before them. They are a normal part of our everyday lives as well. So familiar have they become to us, as to escape notice. 
However, when we observe these very same elements in a Chinese context, we are struck by their ‘uniqueness’, their efficiency, their pervasiveness. China’s credit system efficiency and pervasiveness are a function of China’s capability to integrate each one of the various components of social credit in a way Western countries are still incapable of. China’s capability eventually stems from features of its bureaucratic apparatus, from the softening of the public-private divide in the sphere of governance, from the acceptance of market mechanisms, and a will to ensure their smooth operation. 
…but social credit systems operate in the West too. 

Social credit is nothing else than a form of hybrid, private-public governance. There is nothing really new in public administration borrowing governance techniques from private companies, and using these to rule the population of Western countries. After all, this is what public-private partnerships and new governance are about. These topics are the staples of public administration studies, management, and more. 
As I have explained elsewhere, when China started its modernization drive in 1978, it abandoned earlier governance approaches created in the Soviet Union, to embrace all those governance techniques created in the West. Generally speaking, Western governance techniques were thought to be more effective in developing the economy, and in governing the population through softer, indirect means. As Western governance techniques were adopted by China, they were however adapted to China’s political, economic, governmental, and societal context, until they gradually morphed into an entity of its own. 


A Variant of Modern, Post-1970s Governance 
Because of this reason, China’s social credit system should be considered a variant of a wider governance system, which is based on the blurring of all distinctions between the ‘public’ and ‘private’ sphere. True, in Western countries we may not use the ‘honest’ app to check information about our neighbours but, who can in full honesty say to have never had a peek at the Twitter or Facebook profile of a potential tenant or employee? This simple, ordinary act, involves private citizens performing checks which – in China – are a prerogative of the state. 
So while the subjects who perform checks may vary, in different contexts the same information is harvested and analyzed in similar ways to reach conclusions about your reputation and mine. 

Both systems are premised on values – yes, values such a honesty, credibility, the ability to maintain one’s promises. But, while in the West these values are promoted either by one’s embracing of a religious confession or as a result of following an individual ethical system, in China they are promoted by the state. 

Both systems are not without challenges: what makes you honest in your friend’s eyes may make you dishonest in the eyes of your enemy. A conduct which may be entirely normal in the Mediterranean, such as keeping the blinds shut during a very hot sunny day, might be seen as a marker of suspicion in countries with shorter daylight hours. The degree of pigmentation of a person’s skin may lead to the making of unproven assumptions about that person’s morality, honesty, work ethics and so on.
These challenges, however, lie not in the blurring of the lines between ‘public’ and ‘private’.
A neat, rigid division between public and private sector may exist more in the world of legal forms and categories, than in the reality of new governance, as this technique emerged in Europe more or less forty years ago. What makes China different from the West is that, in China, the very pretense of such a division is collapsing. Perhaps, the division many of us are familiar with, in China existed only in the eyes of beholders.
In China, a contiguity between Party, state, public, private, NGOs, society is seen as the norm, and it is openly acknowledged. Holism is not just a perspective in ancient Chinese cosmology – it is very much a feature active in the most different organizational contexts and circumstances. 

How this feature will shape China’s approaches to social credit remains to be seen.

Text and pictures © Flora Sapio 2017

Social Credit Weekly News Summary – 26th June 2017

Welcome to this week’s edition of the News Summary at China’s Social Credit System – A Collection of Documents blog. As part of the joint project launched by the Coalition for Peace and Ethics and the Foundation for Law and International Affairs, this post brings you the three most important developments in the social credit system  that occurred from 19th to 25th June 2017. 


Shanghai Municipality passes what has been dubbed ‘China’s first comprehensive local regulation on social credit’

The Shanghai Regulations on Social Credit (上海市社会信用条例 Shanghaishi shehui xinyong tiaoli) were issued on 23rd June. While the full text of the Regulations was not yet available as of June 25th, the President of Shanghai’s People Congress, Ding Wei, stated how this document is meant to provide stronger protection to individual personal information. In fact, in their general principles the Regulations state how “The collection, gathering, sharing and other activities related to social credit information shall abide by the principles of legality, objectivity and necessity (…) it shall not infringe (…) personal privacy and personal information.” [read more here]


According to the Legal Daily, 12 months after the Guiding Opinion on Improving The System of Joint Incentive and Joint Punishment (here, in Chinese) was passed, a total of 7,610,000 pieces of information were published on persons subject to enforcement for ‘breaking trust’. The sale of plane tickets was restricted on 7,330,000 occasions, the sale of railway tickets was restricted on 2,760,000 occasions. A total of 1,500 enterprises were blacklisted, due to irregularities in their financial management.  [read more here]


The Supreme People’s Court website reported that on 20th June the Central Propaganda Department and the Supreme People’s Court held a conference titled ‘Promoting the Institutionalization of Integrity, Nurturing the Practice of Core Socialist Values. The conference pointed out the need to construct a social credit system based on the combination of ‘hard’ and ‘soft’ forms of regulation, where the social cost of breaking trust would be as such as to make individuals unwilling to transgress relevant norms of conduct. The conference called for strengthening the role of people’s courts in the construction of a system of integrity through legal interpretation and adjudication [read more here]

From China to Facebook

This post presents an abridged translation of an article appeared on the June 19 issue of the Italian magazine ‘Pagina 99.’ Speakers and readers or romance languages may access the full text of the article at this link.

Readers of this blog can find an integral transcript of the interviews given by Larry Catà Backer and Zhu Shaoming here and here. Flora Sapio spoke to Cecilia Attanasio Ghezzi by phone, therefore an interview transcript is not available.  


From China to Facebook
Cecilia Attanasio Ghezzi and Gennari Santori



Take a picture of your face and upload it to a mobile app managed by your city’s government. Tap in your ID card number and, if you live in Shanghai, within 24 hours you will receive all of the information the government has about you. If you have been a good boy and you have your papers in order, you will be rewarded. Your reward may be a discount coupon on your next flight back home, or free access to an exclusive arline lounge. But, what happens if you have been bad? We don’t yet know.


In all likelihood, a year from now you may aim your smartphone at your neighbour and know all about her. For now, there is only so much information you local government can lawfully disclose. (…) But, you can already obtain plenty of information on your favorite restaurant’s food hygiene standards…

Local governments all across China are competing to meet the objective Beijing has set for 2020: the construction of a social credit system to oversee the conduct of all legal and physical persons who live or operate in the People’s Republic. We know what you’re thinking. China is different. And also far from Italy. But the truth is, should they agree to comply with the will that drives the social credit system, all the various ‘Apples’, ‘Googles’ and ‘Facebooks’ would find a goldmine.

An Ambitious Experiment in Social Management


As a matter of fact, China’s experiment is the most ambitious governance experiment in the world which, according to China’s Five-Year Plan, will involve almost one billion and a half people within three years. As Pennsylvania State University’s Professor Larry Catà Backer points out: 


Life in the Age of Algorithms

(…) in the meantime, e-commerce Giant Ali Baba has launched Zhima xinyong fen, also known as ‘Sesame Credit’, a complex system of interlocking algorithms which traces internet users’ consumption choices and computes their lender’s score. Their score, however, is not calculated on the basis of how much money they spend online, but also on the basis of what they purchase and how their ‘virtual friends’ behave. 


The system was born in response to a concrete need: attempting to find a way in a fast growing market. In China, bank loans, mortgages, online payments and credit cards have been growing exponentially. Today more than 30 per cent of Chinese citizens has a credit card, twice as much as only five years go. 

At the beginning of 2015, China’s central bank gave eight companies an authorization to run pilot projects to evaluate citizens. The stated goas was creating a nation-wide system by 2020, to evaluate not only lenders’ scores, but also judge citizens through their online behavior. The system should ‘raise the levels of mental honesty and credibility of an entire society’ – this is true also for companies which will have to regulate themselves to comply with the governments’ dictates. 


According to Flora Sapio, who is exploring this theme and its broader implications,

“It is still too early to know what shape the social credit system will eventually take. If correctly applied, the system will contribute to a better functioning of markets, by placing a check on unlawful conducts by citizens and enterprises.” 


Zhu Shaoming, the chairman of the Foundation for Law and International Affairs, added that: 

“Once the new model of social credit is well accepted, it might in turn affect business models throughout the rest of the world”. Because of this reason, “It is very important to establish how the data will be managed, applied, and protected. It is also important to leave space for private rights that are not monitored. “

 © Flora Sapio 2017

Scenarios of China’s Social Credit System

In the week of June 1, the Italian magazine Pagina 99 conducted interviews on China’s social credit systems with Larry Catà Backer, Zhu Shaoming, and Flora Sapio, as part of the research on an article on China’s Social Credit System. The article, entitled ‘From China To Facebook’, was published in the June 16 issue of the magazine. 

This is the first in-depth press report on social credit to appear on the Italian press. 

Its authors – Cecilia Attanasio Ghezzi and Gennari Santori – hold MA degrees in Chinese Language and Archaeology, and they have lived and worked in Beijing. This post presents the full text transcript of Zhu Shaoming’s interview. 

An integral transcript of the interview Larry Catà Backer gave to Pagina 99 is available at Law at the End of the DayFlora Sapio conducted the interview with Cecilia Attanasio Ghezzi by phone. 

An English translation of the article will soon be published on this website. The integral transcript of Zhu Shaoming’s interview follows.






1. When did you start to focus on china social credit (and why)

I started to focus on China social credit in March 2017, when the National People’s Congress was held in Beijing. Several congressmen proposed the law drafts related to the social credit matters. I study the jurisprudence of legislation and care about the conceptual and theoretical issues — What does social credit mean, what is professional ability on a certain matter or personal integrity? Does transparency create motivation or suppress economic power? 
The social credit system in China is now a major research project in our organization, the Foundation for Law and International Affairs. Credit rating systems have been very well developed in the US and the EU. We would like to understand their different features and the reasons that gave rise to the features, and compare the situation in China. The nature of the topic clearly indicates that it will influence individuals, enterprises, and the whole legal system. Right now is a critical phase of developing legislation on the social credit system in China. 


2. Did you study the Honest Shanghai app case? Can you comment on this? 

I am not sure what you mean by “Honest Shanghai App Case.” I know this app; it is promoted by the Shanghai Municipal Commission of Economy and Information. This app does provide general credibility information about individuals and enterprises. In addition to this app, there are many other ways to find the credibility information through sites and apps of the Industrial and Commercial Bureaus and banks. These sites and apps offer convenient access to others’ credibility information free of charge.


3. There are more than 30 government projects on this topic. All are different. Can you explain to us which are best and the worst (and why) 

I think it is very difficult to conclude which are best and which are worst. But I do believe that the advancement of integrity in government affairs and judicial credibility are the most important. The credibility of governmental organizations and judiciaries will decide the climate to a significant extent. The most controversial aspect is its collective effect when the projects cover so many topic and matters. It is very important to establish how the data will be managed, applied, and protected. I think it is also important to leave space for private rights that are not monitored. 


4. How important is for the Chinese government the 2020 deadline 

According to the “State Council Notice Concerning Issuance of the Planning Outline for the Establishment of a Social Credit System (2014-2020)”, by 2020 it is critical to establish the fundamental legal system for social credit as well a credit investigation system that covers the entire society with credit information and resource, a credit supervision and management system, a credit service market system, and rewarding and publishing mechanisms. That means 2020 should be the anticipated time when the society will be running in a relatively transparent and predictable platform. In other words, 2020 will open a new area of China’s legal system and societal power. 2020 is also the year when a government under rule of law which has scientific functions, law-defined powers and responsibilities, which enforces the law strictly and impartially and which is open, fair, honest and efficient, law-abiding and creditable should be established (according to the “Implementation Outline for Building a Government Ruled by Law (2015-2020)). In addition, 2020 is the established year when a moderately prosperous society should be completely built. That is to say, 2020 is a critical time for the Chinese legal system and societal development. A relatively completed social credit system requires the integrity of government affairs. The integrity of government affairs is connected with a government ruled by law. A relatively completed social credit system will be an important component leading to a moderately prosperous society. Therefore, the 2020 deadline is very important for the Chinese government. 


5. Best and worst scenario 

The best scenario is all of the above goals are reached. The social system starts to play the role in all aspects of Chinese society. China opens a new era of its legal system. The economic and societal environment starts a virtuous circle. The worst scenario is that by 2020 new laws and regulations are enacted but require many revisions to other current laws and regulations. It might cause conflicts between different laws and legal documents with different levels of authority within the legal hierarchy. 


6. Is this experiment going to influence the rest of the world? How? 

The most direct influence to the global community is that foreign investors will need to create their credibility profile in China. This suggests that there will be more stringent frameworks and rules that foreign investors and enterprises have to follow in China. This will, of course, have some impact on their business models. Once the new model of social credit is well accepted, it might in turn affect business models throughout the rest of the world. On the other hand, I think our attention to this topic, and the attention of other scholars and practitioners in Western countries, is proof that this experiment is already influencing the rest of the world. In That said, how exactly it will influence the global community in the long-term remains to be seen. 


7. Do you want to point out some other topic related to the matter? 

FLIA is co-hosting a conference on China’s social credit system together with Shanghai Jiaotong University Koguan School of Law, East China University of Political Science and Law’s School of Economic Law, and Tencent Holdings Limited. The following topics will be discussed are all very much related to the matter: 

1. The legal structure and content of the social credit system, its drafting history, and its provisions;
2. The theoretical and conceptual issues of the social credit system and how it fits with the basic line;
3. The technical issues of the social credit system, including the collection and application of data, the rating system, etc.;
4. The Institutional issues of the social credit system and the roles of government and other stakeholders, and the protection of personal information;
5. The social credit system in a global context and as a current trend in China; and
6. The implementation of regulations on the social credit system and how it fits within the rules system in Shanghai. 

In addition, many other important questions are worth considering: How should China deal with the relationship between the social credit system and the administrative penalty system? How are big data transactions conducted in the EU and the US? How should China conduct big data transactions and how to protect the data?



About Zhu Shaoming

Shaoming Zhu is the Founder and President of FLIA

She is an SJD candidate at the Pennsylvania State University. She received her Bachelor of Laws and Master of Laws in China. Her publications, including books, articles, blogs, and funded research projects focus on jurisprudence, comparative law, private international law, NGOs and global governance, Chinese legislation on social and economic development, and other related topics. 

Shaoming Zhu has been granted more than 40 awards for her academic and social work.

Anhui Province Wuhu Municipality Notice on the Joint Punishment of Breaches of Trust in Some Major Areas

安徽省芜湖市关于在部分重点领域实施失信行为联合惩戒的通知

 

安徽省芜湖市各县、区人民政府,省江北产业集中区、经济技术开发区、长江大桥开发区、高新技术产业开发区管委会,市政府各部门和直属单位,驻芜各单位:

根据《国务院关于印发社会信用体系建设规划纲要(2014—2020年)的通知》(国发〔2014〕21号)和《失信企业协同监管和联合惩戒合作备忘录》(发改财金〔2015〕2045号)、《关于对失信被执行人实施联合惩戒的合作备忘录》(发改财金〔2016〕141号)文件精神 More

Yancheng Municipality Temporary Measures on Managing Credit Service Institutions (For Trial Implementation)

江苏省盐城市信用服务机构管理暂行办法(试行)

 

第一章 总则

第一条 为加快推进盐城市社会信用体系建设,培育发展和规范信用服务机构,促进信用服务行业的健康发展,根据国务院《征信业管理条例》、《中国人民银行关于推进信贷市场信用评级管理方式改革的通知》、《江苏省信用服务机构备案办法(试行)》、《盐城市在行政管理中使用信用信息和信用产品实施办法(试行)》和有关法律、法规等规定,结合本市实际,制定本办法。

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Canton Municipality Measures on Managing the Loan Risk Compensation Fund for Technology SMEs

 

 
关于印发《广州市科技型中小企业信贷风险补偿资金池管理办法》的通知
 
 
  穗科创〔2015〕11号

广东省广州市各区科技主管部门、各有关单位:

为贯彻落实《广州市人民政府办公厅关于促进科技金融与产业融合发展的实施意见》(穗府办〔2015〕26号),进一步促进科技和金融结合,引导和鼓励商业银行加大对科技信贷支持力度,现将《广州市科技型中小企业信贷风险补偿资金池管理办法》印发给你们,请遵照执行,执行过程中遇到的问题,请径向市科技创新委反映。

广州市科技创新委员会
广州市财政局
2015年9月9日

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