CHINA’S SOCIAL CREDIT SYSTEM
The ultimate goal is to build self-enforcing mechanisms for business regulation: Based on advanced big data technologies, the system is designed to constantly monitor and evaluate companies’ economic as well asOne reason why central planning failed was the lack of data. You can't centrally plan an economy when you don't have all the data necessary. Big Data is a scientific solution to the problems of scientific socialism. There will be those who want to try again because the problem of data collection will appear to be overcome.
non-economic behavior. Automatically generated and updated rating scores will have an immediate impact on their business opportunities. Intervention by government bodies can thus be reduced to setting the rules, standards, and, eventually, algorithms for the system. This will minimize their constant supervision of and visible interference in market processes.
The system will create strong incentives for companies to make their business decisions and operations comply not just with laws and regulations but also with the industrial and technological policy targets laid down by the Chinese government. Foreign companies active on the Chinese market are planned to be integrated into the system and treated the same way as their Chinese competitors. Foreign companies will also be subjected to the full extent of industrial policy guidance.
At the heart of the Social Credit System lies massive data collection on company activities by government agencies and authorized rating entities. The system has the potential to strengthen transparency and trustworthiness
in market exchanges as well as the socially and environmentally responsible behavior of companies. On the other hand, it will be prone to failing technologies, data manipulation, and the politically induced, unidirectional
allocation of investments. It will thus reduce the capacity for autonomous business decisions or non-standard disruptive business models and pose a constant risk to the protection of proprietary company data.
If the Chinese government succeeds in implementing the Social Credit System and its related mechanisms, companies’ market activities will be regulated in a self-enforcing manner: enabled by advanced big data technologies, the system is designed to constantly monitor and evaluate companies’ economic as well as non-economic behavior. Automatically generated and updated rating scores will have an immediate impact on companies’ business opportunities. This creates a strong incentive for companies to make their business decisions and operations comply not just with laws and regulations but also with the government’s industrial and technological policy targets. Beijing terms this the “self-restriction of companies” (企业自我约束)While a centrally planned economy is still likely to fail, a "Mark of the Beast" economy could function. Imagine if you get "Poz Points" for your social media posts. Imagine this lowers your mortgage rate or gets you pushed ahead in line at the airport, or for a university slot. Even your tax rate might adjust:
Possible punishments as a result of bad ratings include:China's already implementing parts of the system: China penalises 6.7m debtors with travel ban
unfavorable conditions for a new loan
higher taxes than compliant competitors
no permission to issue any bonds or invest in companies listed
on the stock market
decreased chances to participate in publicly-funded projects
mandatory government approval for investments, even in sectors where market access is not usually regulated
In severe cases, the company’s e-commerce accounts could be shut down and even its high-level management’s individual credit ratings could be affected. A company’s manager could be denied tickets for high-speed trains or for international business flights. On the other hand, a fully compliant company can benefit from:
a largely open Chinese market with manifold investment opportunities
low tax burdens
good credit conditions
gentle support from government incentive mechanisms
China has banned almost 7m people from taking flights and high-speed trains over the past four years as a penalty for not repaying their debts, the country’s Supreme Court has announced.Technology is whatever you make of it. Totalitarians will have an ability to control you as never before, an iron fist in a velvet glove as never before. Wouldn't you be stupid to question Bruce Jenner's sex if it meant your tax rate and mortgage goes up? There will be no escape because all commerce will eventually be conducted publicly using the People's Bank of China's blockchain.
The penalty system is part of efforts to build a nationwide “social credit” system that will rate every Chinese citizen by collecting big data on financial, legal or social misdeeds. The debtors’ travel ban has been touted as an important first step for building the structural links needed to implement such a comprehensive monitoring programme.
“We have signed a memorandum . . . [with over] 44 government departments in order to limit ‘discredited’ people on multiple levels,” Meng Xiang, head of the executive department of the Supreme Court, told state media on Wednesday. The memorandum includes all the country’s big banks as well as the national public security bureau.
Since 2013 the Supreme Court has operated a “discredited” blacklist of long-term debtors who have been ordered to repay what they owe. All 6.73m people on the list have been banned from boarding flights and high-speed trains.
The ban works by blocking personal ID card numbers, which are required for buying and checking in for flights and trains as well as staying in hotels. Anyone can search the blacklist via the Supreme Court’s website by entering a full name and ID card number.