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Western media has a knack for portraying China’s social credit system as a sinister, invasive method of controlling society by assigning a behaviour score to each citizen. This carefully considered article argues, however, that while a score system does exist, it possesses a more benign purpose. It is set up to inject trust into the economic ecosystem, incentivising integrity and penalising lawbreakers by blacklisting them. You might end up on the list if you don’t pay debt as soon as extra cash is available, or if you don’t comply with a court order to visit your elderly parents. Beijing works closely with technology firms to gather this data, which is mutually beneficial because the blacklisted are less likely to be hired, lack access to private schools, and are banned from purchasing, say, luxury goods on Alipay. These collaborations go as far as creating ‘credit cities’ where citizens with good scores can rent flats without a deposit or delay cab ride payments. So is the system fair? And does it serve its purpose?
Why does this matter? Collecting and storing citizen data citizens is neither new nor unique to China. In the US, businesses and the government gather and use information from consumers ranging from shoplifting behaviour, bad rental and tenancy records, and return-shopper fraud. Even though it’s subtler and less threatening than in China, given the ease of access into personal lives that technology has enabled, activists are calling for more transparency and accountability.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)