The Social Credit System (SCS), China’s score-based system that aspires to instil trust in society, is being tested in pilot cities before its nation-wide implementation.

While the SCS attempts to construct a trust-bonded society within the parameters of Party-defined “trust” and “morality”, it arrives with undercurrents.

How will it change social dynamics, especially with regards to new form of inequalities that it may bring?

What is the Social Credit System?

As the SCS spreads around the country, trust in the system and between citizens could be challenged by the inequalities and operational conflicts that are likely to arise.

The SCS is a reward and penalty driven social management scheme introduced by the Chinese government. Those with high credit receive access to perks and enjoy priority in some services. Those with low credit scores risk losing access to a range of services including international travel and quality education.

Currently, the SCS is in operation in pilot cities under the supervision of municipalities and provincial governments and is managed by commercial enterprises.

The SCS brings about more inequalities

The SCS currently has a high public approval rating among those with a high-income, high-level of education, and who live in urban areas. These three factors will markedly affect experiences with SCS and will intensify the hierarchy in society.

A recent study shows that urban-dwellers were more likely to receive incentives offered by the SCS and reap the benefits. Existing income inequality may influence users’ capitalisation of SCS as well. Scholars argue that people with high-incomes and frequent-spending habits are likely to have an edge in receiving higher credit scores.

The market of social credit is not safe from manipulation. Services in the black market that can increase SCS scores have been identified. Although it may not take the authorities long to identify such services, new ways of manipulating scores will inevitably emerge. Those with sufficient income may take advantage of such services and the black market may cheat the very system that seeks to instil trust. The system may perversely come to reward existing financial advantage and access to the black market.

And the divide may deepen in the second-generation experiencing life with SCS as children of low-performers will have to overcome the burden of their parents’ scores to increase their credit position in the society.

Hierarchy built on inequalities

Hierarchy affects various facets of life in China, despite governance by a Communist regime for decades. The existing inequality and the social hierarchy in China may obscure the potentially damaging consequences of the SCS. And even meagre incentives offered by the system may receive a “better than nothing” response.

Confucianism and thousands of years of feudalism sculpted the structure of hierarchy before the arrival of communism in China. For instance, Confucianism classified careers into four levels: educated and/or officials; farmers; workers/craftsmen; and merchants. The Communist government launched various movements to eradicate this hierarchical culture.

However, the Communist government continued to nurture hierarchy in other ways; the “five black categories (黑五類)” for example. After Deng Xiaoping’s economy-liberalising reforms, various classifications, such as Chinese Communist Party (CCP) members versus non-Party-members, officials versus civilian, and regionalism have been retained in Chinese society.

Given the familiarity with social hierarchy, hierarchy built on inequality in the SCS may not be a significant shock for Chinese people. If Beijing can assert the credibility of the SCS, some may see the SCS as an opportunity to climb up the social ladder and access financial and practical perks.

Nevertheless, Beijing will face roadblocks. The nation-wide penetration of SCS may bring about conflicts between officials at different levels of government. Clearly unfair conditions might put citizen’s trust in government to a test. And corruption is always an issue.

The SCS may provide a window into the acts of officials. Some government officials have already been entered into the blacklist due to accusations of corruption. While this apparent check on government officials may elevate citizens’ trust in SCS and the government, how the supposed transparency brought by the SCS and supervision of acts would apply to the highest levels of the government remains in doubt.

Public participation and the interests of political elites may prove to be incompatible. A disparity in standards may eventually lead to unease with the system and damage popular support. Furthermore, the SCS could become an important tool in the political power struggle among different factions of CCP. The SCS may grant some authorities sufficient intelligence to counter their rivals. It could also expose the incongruence between what officials say and what they do. If exposed wrongdoings do not receive a just penalty and corruption continues, citizen trust in the officials and the SCS may decrease.

The opacity of the scoring system may also cause distrust and discontent in the long run. The studies of both Severin Engelmann and colleagues and Genia Kostka touch on problems with the scoring system. According to Engelmann and colleagues, although the measures for penalty are relatively clear, criteria for incentives are obscure. Kostka’s survey-based research shows that the approval of the SCS is highly influenced by the transparency of the scoring system. The lack of transparency, coupled with the allegations of black market activity for boosting credits may challenge the legitimacy of the system and cause public dissatisfaction.

The nation-wide implementation of the system is drawing near

The nation-wide implementation of the SCS is a huge undertaking. It is nothing short of a new paradigm of governance based on unprecedented surveillance. As the SCS spreads around the country, trust in the system and between citizens could be challenged with the inequalities and operational conflicts that are likely to arise.