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Social Credit System
The Social Credit System (Chinese: 社会信用体系; pinyin: shèhuì xìnyòng tǐxì) is a national credit rating and blacklist implemented by the government of the People's Republic of China. The social credit system is a record system so that businesses, individuals, and government institutions can be tracked and evaluated for trustworthiness. It is based on varying degrees of whitelisting (termed redlisting in China) and blacklisting.
There has been a widespread misconception that China operates a nationwide and unitary social credit "score" based on individuals' behavior, leading to punishments if the score is too low. Media reports in the West have sometimes exaggerated or inaccurately described this concept. In 2019, the central government voiced dissatisfaction with pilot cities experimenting with social credit scores. It issued guidelines clarifying that citizens could not be punished for having low scores and that punishments should only be limited to legally defined crimes and civil infractions. As a result, pilot cities either discontinued their point-based systems or restricted them to voluntary participation with no major consequences for having low scores. According to a February 2022 report by the Mercator Institute for China Studies (MERICS), a social credit "score" is a myth as there is "no score that dictates citizen's place in society".
The origin of the concept can be traced back to the 1980s when the Chinese government attempted to develop a personal banking and financial credit rating system, especially for rural individuals and small businesses who lacked documented records. The program first emerged in the early 2000s, inspired by the credit scoring systems in other countries. The program initiated regional trials in 2009, before launching a national pilot with eight credit scoring firms in 2014.
The Social Credit System is an extension to the existing legal and financial credit rating system in China. Managed by the National Development and Reform Commission (NDRC), the People's Bank of China (PBOC) and the Supreme People's Court (SPC), the system was intended to standardize the credit rating function and perform financial and social assessment for businesses, government institutions, individuals and non-government organizations. The Chinese government's stated aim is to enhance trust in society with the system and regulate businesses in areas such as food safety, intellectual property, and financial fraud. By 2023, most private social credit initiatives had been shut down by the PBOC.
The origin of the Social Credit System can be traced back to the early 1990s as part of attempts to develop personal banking and financial credit rating systems in China, and was inspired by Western commercial credit systems like FICO, Equifax, and TransUnion. The credit system aims to facilitate financial assessment in rural areas, where individuals and small business entities often lacked financial documents.
In 1999, businesswoman Huang Wenyun wrote a report following her negative experiences with domestic business trustworthiness and her research into credit management in the United States business environment. At the time, credit management and rating were largely unfamiliar concepts within the Chinese economy. Huang sent her report to Premier Zhu Rongji, who approved it and in August 1999 ordered the People's Bank of China to take immediate action. In September 1999, the Institute of Economics of the Chinese Academy of Social Sciences began a research project on establishing a national credit management system. Huang contributed more than RMB 300,000 to fund the research initiative and sponsored fieldwork in the United States and Europe. In the United States, the research group studied and prepared translations of 17 American credit reporting laws, including the Fair Credit Reporting Act.
In January 2000, the research group from the Chinese Academy of Social Sciences compiled their research into a text titled National Credit Management System. Among these academics was Lin Junyue, who became an important intellectual figure in the development of social credit. Premier Zhu approved the text and instructed government figures from ten ministries and commissions to begin studying the creation of a social credit management system. In late January 2000, the State Council released an essay by Zhu in which Zhu stated that China must "vigorously rectify social credit." In March 2000, Zhu delivered the government's work report to the National People's Congress, in which Zhu talked about the need to rectify social credit in the context of supervision of financial institutions, fraud, tax evasion, and debt repayments.
In 2002, the construction of a social credit system was formally announced during the 16th National Congress of the Chinese Communist Party. The central government had not developed a specific vision for what a finished system might look like. Local governments were to develop pilot initiatives which could then guide the larger policy approach.
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Social Credit System AI simulator
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Social Credit System
The Social Credit System (Chinese: 社会信用体系; pinyin: shèhuì xìnyòng tǐxì) is a national credit rating and blacklist implemented by the government of the People's Republic of China. The social credit system is a record system so that businesses, individuals, and government institutions can be tracked and evaluated for trustworthiness. It is based on varying degrees of whitelisting (termed redlisting in China) and blacklisting.
There has been a widespread misconception that China operates a nationwide and unitary social credit "score" based on individuals' behavior, leading to punishments if the score is too low. Media reports in the West have sometimes exaggerated or inaccurately described this concept. In 2019, the central government voiced dissatisfaction with pilot cities experimenting with social credit scores. It issued guidelines clarifying that citizens could not be punished for having low scores and that punishments should only be limited to legally defined crimes and civil infractions. As a result, pilot cities either discontinued their point-based systems or restricted them to voluntary participation with no major consequences for having low scores. According to a February 2022 report by the Mercator Institute for China Studies (MERICS), a social credit "score" is a myth as there is "no score that dictates citizen's place in society".
The origin of the concept can be traced back to the 1980s when the Chinese government attempted to develop a personal banking and financial credit rating system, especially for rural individuals and small businesses who lacked documented records. The program first emerged in the early 2000s, inspired by the credit scoring systems in other countries. The program initiated regional trials in 2009, before launching a national pilot with eight credit scoring firms in 2014.
The Social Credit System is an extension to the existing legal and financial credit rating system in China. Managed by the National Development and Reform Commission (NDRC), the People's Bank of China (PBOC) and the Supreme People's Court (SPC), the system was intended to standardize the credit rating function and perform financial and social assessment for businesses, government institutions, individuals and non-government organizations. The Chinese government's stated aim is to enhance trust in society with the system and regulate businesses in areas such as food safety, intellectual property, and financial fraud. By 2023, most private social credit initiatives had been shut down by the PBOC.
The origin of the Social Credit System can be traced back to the early 1990s as part of attempts to develop personal banking and financial credit rating systems in China, and was inspired by Western commercial credit systems like FICO, Equifax, and TransUnion. The credit system aims to facilitate financial assessment in rural areas, where individuals and small business entities often lacked financial documents.
In 1999, businesswoman Huang Wenyun wrote a report following her negative experiences with domestic business trustworthiness and her research into credit management in the United States business environment. At the time, credit management and rating were largely unfamiliar concepts within the Chinese economy. Huang sent her report to Premier Zhu Rongji, who approved it and in August 1999 ordered the People's Bank of China to take immediate action. In September 1999, the Institute of Economics of the Chinese Academy of Social Sciences began a research project on establishing a national credit management system. Huang contributed more than RMB 300,000 to fund the research initiative and sponsored fieldwork in the United States and Europe. In the United States, the research group studied and prepared translations of 17 American credit reporting laws, including the Fair Credit Reporting Act.
In January 2000, the research group from the Chinese Academy of Social Sciences compiled their research into a text titled National Credit Management System. Among these academics was Lin Junyue, who became an important intellectual figure in the development of social credit. Premier Zhu approved the text and instructed government figures from ten ministries and commissions to begin studying the creation of a social credit management system. In late January 2000, the State Council released an essay by Zhu in which Zhu stated that China must "vigorously rectify social credit." In March 2000, Zhu delivered the government's work report to the National People's Congress, in which Zhu talked about the need to rectify social credit in the context of supervision of financial institutions, fraud, tax evasion, and debt repayments.
In 2002, the construction of a social credit system was formally announced during the 16th National Congress of the Chinese Communist Party. The central government had not developed a specific vision for what a finished system might look like. Local governments were to develop pilot initiatives which could then guide the larger policy approach.