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“Mechanisms of encouragement and punishment”: how in China is an experimental system of assessments of citizens and companies

Holiday pictures AP

Since May 2018, Chinese citizens with low “social ratings” will cease to be allowed on airplanes and trains. This decision is directly related to the experimental rating system, which the authorities have been developing since 2014. According to the idea, she will assess all citizens on the basis of their behavior, financial situation, purchases and violations. The lower the rating, the more difficult it is for a person to use municipal services.

According to the Chinese authorities, the system, which is being criticized by Western human rights defenders, will increase the economic literacy of citizens and help in the fight against offenders. For this reason, the Communist Party agreed with the technological giants on the creation of the first versions of the “credit rating” programs and uses all available tools for collecting information. The authorities of individual regions are already experiencing development “in the field”, but it is still not clear how exactly they plan to impart to the personal rating more than a billion people in China.

Personalized for the whole of China

In 2010, the authorities of Jiangsu Province found the division into categories inappropriate and got rid of it, but continued to collect information about citizens. The main sources of information were government agencies, a police base, data from private companies and Internet services. Many large organizations help in the development of the project, which, according to the Communist Party, will not only help in the victory over corruption and fraud, but will also create an “atmosphere of trust” in the country.

The origin of the idea of ​​a “credit and social system”

For the first time the idea of ​​creating a “social system” was put forward by theState Council of the PRC in 2007. The original project was to process the data on the client of the bank and determine its solvency on loans or other loans. Similar systems exist in all countries with developed economies, including the United States.

In 2013, President Hu Jintao was replaced by the current ruler of Xi Jinping. In June 2014, the State Council published a revised draft for the creation of the SCS system, the launch of which was planned for 2020. According to the plan, by this year every company and citizen of China (the population of the country is 1, 379 billion people) will be evaluated by this system and receive a personal rating.

Xi Jinping in the data center in Guizhou. Photo by Xinhua

The Chinese authorities explained that a large-scale collection of information will enable them to form a more complete credit history about citizens of the country and thus attract interest to banks. At that time, the People’s Bank of China, the only one with the official credit system, serviced 300 million people or 25% of the population in this direction, but almost all of them had no credit history. For comparison – in the US, about 89% of adult citizens have a credit history and a rating of paying capacity. As explained by the Communist Party, annually due to distrust of citizens to banks, the country’s economy is losing $ 95 billion.

Apparently, the State (National) Committee for Development and Reforms of the People’s Republic of China is responsible for the creation and development of SCS. It is he who publishes reports on the development of the program. The exact author of the initiative is unknown, but the head of state Xi Jinping personally spoke about it personally .

To deal with the acute problem of lack of trust, one must firmly take up the creation of a system for assessing the reliability that covers the whole of society. It is necessary to improve both mechanisms for encouraging law-abiding and conscientious citizens, as well as mechanisms for punishing those who violate the law and lose trust, so that a person simply does not dare, simply could not lose confidence.

Xi Jinping
PRC President

Information in exchange for bonuses

Immediately after the announcement of the reform, the authorities agreed to establish a SCS system with 10 companies, including the giants Alibaba and Tencent. In 2015, both companies created almost identical applications, which with the permission of users (they can refuse to issue data) began to collect all available information about them.

Tencent uses two of its largest messengers, QQ and WeChat, to collect data (more than 800 million or more billion users ). Alibaba has created Sesame Credit , which receives information about purchases, payment of accounts and favorite places of users through the Alipay payment system (more than 520 million users).

Additionally, both applications receive information about the actions of a person from municipal institutions, police stations, research centers and private companies. Based on this database, the user’s rating is built: the higher it is, the more bonuses the person receives.

Office of the company Baihe. Holiday pictures AP

For low or average points (a high figure is more than 800 of 950 points) Sesame Credit will offer the user only small bonuses: for example, additional gifts in the dating application Baihe (requires passport data when registering). In this case, the program will tell you how many points you need for other bonuses: discounts for booking a room in a prestigious hotel, the ability to rent a car without a deposit or to apply for a loan at a lower rate.

As the number of private partners of Sesame Credit increases, the number of bonuses within the application increases and, accordingly, the number of users of the system. The number of points in Sesame Credit is also reflected in other affiliate applications: in Baihe this helps to appear higher in the lists and find a pair faster.

The details of Sesame Credit’s algorithms are not disclosed, but the rating is formed on the basis of four points, successes for each user can be viewed in a separate menu.

  • The price of goods purchased by the user, and the frequency of acquisitions. It is not known exactly whether the system takes into account what kind of goods a person has acquired;
  • Place of work and position of the user, as well as address of residence;
  • Timeliness of payment of accounts and repayment of debts, including loans. This is the most important category, the delay in the loan immediately negatively affects the rating;
  • Number of friends in Sesame Credit or, in the case of the Tencent application, in WeChat and QQ. The more the user of friends, the higher the rating. Friends can allow each other to view their ratings.

It is not known what role Sesame Credit plays in creating a state “credit and social system”. Most likely, the authorities plan to translate (or already translate) information from applications into a government research center (its location is unknown), where the data is processed by the algorithm.

Sesame Credit cooperates with the Supreme Court of China and provides data to users suspected of the investigation. In 2015, this information led to the conviction of 5,300 people – they were forbidden to book rooms in expensive hotels and lowered the level of credit trust in banks. In the summer of 2017, Sesame Credit data led to the conviction of more than 7 million people. Most of the defendants lost the ability to fly on airplanes, and about 3 million people in addition to this for a year lost the right to purchase tickets for high-speed trains.

Experiments in cities

To the end it is not clear how the full-scale rating system will work. Based on government reports, articles of state media and interviews with the authors of the project, The Wall Street Journal determined a partial methodology for the system. She will collect a credit history, statistics on bank accounts, purchase checks, a list of favorite places and reports on offenses, as well as monitor the activity on the Internet and the citizen’s interactions with other users.

Based on these data, a rating will be generated for which the user will receive or lose access to municipal and private services. For example:

  • Discounts in insurance companies;
  • Access to rooms in expensive hotels;
  • Travel abroad;
  • The opportunity to arrange children in a prestigious educational institution;
  • The opportunity to get medical and other social services out of the queue, paying a fee;
  • A more facilitated way to get a loan for a larger amount;
  • Access to the Internet without traffic restriction;
  • Possibility to get a job in a high position in the Communist Party;
  • Access to flights on airplanes and to trips on high-speed trains.

By 2018, the experimental version of the “credit and social system” works in about 30 cities of China, the leading county is Rongcheng county in Shandong province. Information on citizens’ activity comes from 142 sources, most of which are government and private institutions working on the Internet.

As the state media wrote , all residents of Rongcheng (670 thousand) gave a starting rating of 1000 points. If the person’s rating exceeds the initial figure, he is considered an exemplary citizen: it is easier for him to take a loan from a bank (up to $ 31 thousand without collateral and guarantors), to arrange a car rental or to be treated in a hospital hospital.

The reverse situation for those who have a rating below 600 points – a person can make a blacklist. It will be difficult for him to take a loan, buy a ticket for high-speed trains or an airplane, rent a car or a house. In the latter case, the landlord can simply be afraid to deal with a person with a low rating. To restore the reputation you need to deal with delinquent payments and delinquencies – in the trial version of the system these are the two main reasons for the lowering of the status.

According to the idea, by 2020 the rating of any citizen can be checked on an open state website.

Companies in Rongcheng also participate in the pilot program. Their trust rating increases, if they have no problems with the documentation, they have successfully passed the inspections, passed the financial reports on time and employees do not complain to the management. For this, firms receive benefits – a lower level of taxation, it is easier for them to obtain a loan from a bank or apply to a government agency. For organizations with a low rating, the reverse is the situation: higher taxes, limited investment and the need to take authorization from the authorities to sell securities.

The main questions to the system

In 2016, WSJ journalists interviewed Chinese citizens and found that many had not even heard of the “credit and social system”, but agreed that the authorities should do more to improve morality and decency in society. Chinese President Xi Jinping believes that the rating system will help create an “atmosphere of trust” in the country. However, inside the government there is no complete certainty that the system will be launched on time. State experts believe that the process can be delayed because of the great difficulties in processing data and protecting the system from intruders.

Technical prospects

Although the creation of SCS was announced as early as 2014, the authorities almost do not disclose the details of the development. According to the government, the rating of all citizens will be tied to passports, but it is unclear how people will check their rating without the Internet in distant regions, and also what will happen if someone refuses to participate in the project. In addition, it is unclear how the system will affect people in China without citizenship.

All factors of rating formation are not known to the end: how points in different categories will be combined, whether the political views of a person or his purchases will influence the number of points received or taken away.

Chinese police officer in smart glasses. With their help you can scan the person’s face and find out his name and home address, February 2018. AFP photo

It is also unclear how the algorithm will work: will it be able to quickly and efficiently process data from more than a billion users. In addition to text data, authorities plan to upload photos, audio and video files from CCTV cameras to the system. In 2018, their number totals 170 million, and by 2020 the Communist Party plans to add 450 million more cameras. It is not known how many of them have a face recognition system, but information from even a quarter of all cameras will multiply the load on the algorithm and increase the risk of error.

Financial opportunities

The closest analogue of the Chinese SCS is the American start-up Palantir . This program appeared in 2011 and is confined to the police and special services: it analyzes information about car plates, relatives, offenses of suspects and ordinary residents. In addition, the FBI and the CIA use a service to search for particularly dangerous criminals and terrorists.

Information comes to the service from local municipal institutions, as well as from police and patrol. They indicate information about disadvantaged areas, record suspicious residents and indicate how many people in a particular part of the city carry weapons. As the media write, the system gives investigators convenient and detailed statistics on the area or the suspect.

The company was founded by Peter Tiel, since the beginning of the 2000s he has been cooperating with special services and is considered one of Donald Trump’s information advisers. In February 2018, the media reported that Palantir had been secretly implanted in the New Orleans police system without the knowledge of the local government.

Peter Thiel with US President Donald Trump. Reuters photo

Despite the effectiveness of the program, it is popular with policemen only in large states. The main reason is high costs for the technology. From 2009 to 2017, the Los Angeles police spent $ 50 million on using Palantir. At the same time, the system processes tens of times less data than the Chinese rating development should. It is unclear where the Communist Party will take money to finance such a program, the authorities do not speak about this.

Security

It is not clear where the system will store private information of citizens, necessary to form a rating. American research firm for network security FireEye believes that the Chinese program with data on a billion people will be a major prey for intruders. If they get access to passport and personal data, they can use them to steal money from bank cards or sell the base on the black market.

It is not clear how the system will protect the ratings of people – for example, that prevents an attacker from changing the score of a person or company. Human rights defenders worry that it will not be a society or an independent commission, but only the state, that will make decisions based on the person’s rating.

Chairman of the National Development and Reform Commission of China Lian Weiliang argued that one of SCS’s key goals is the fight against corruption. In his opinion, the system will also help monitor violations in private companies, for example, when selling poor-quality food, and catch scammers. The Communist Party believes that the development will help to effectively calculate terrorists and opponents of the state system.

“China is moving towards a totalitarian society, where the authorities control and influence the private lives of citizens. It’s like Big Brother owning all the information about you, and capable of harming you as he wants, ” said theChinese writer Mujun Xuequn about the” credit and social system. ”

A similar position is held by Western human rights activists and journalists, comparing the development with the device from the series “Black Mirror” or from George Orwell’s novel “1984”. In his book ” To Whom You Can Trust ” about the impact of social networks and the Internet on people’s trust, Rachel Botman talks about the Chinese system with a negative. According to the researcher, the authorities will use the development to monitor people and fight dissent.

The similarity of all such statements is that the authors submit the development as a fait accompli. In fact, the authorities’ motives for creating the system are not clear until the end, and the prospects for launching the program in 2020 are vague. Even if this happens on time, it is likely that it will continue to be rolled out gradually across regions, and total use will have to be postponed.

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