Though the landmark policy that kicked off the construction of the national SCS was released in 2014, the concept of social credit has actually been bouncing around the top echelons of the Chinese government since the late 90s, with the release of a seminal paper from the Chinese Academy of Social Sciences that captured the attention of China’s leadership. 1
At the time, China had only really just begun to open up and integrate into international markets. The growing pains of this massive social shift gave rise to widespread fraud, patent and copyright infringement, consumer safety scandals, and a general disregard for contractual terms and legal agreements. All of this has lead to a low-trust environment in which consumers, businesses, and other market actors treated each other with suspicion.
Trust between the people and the state was in equally poor straits. The ravages of the Cultural Revolution, the effects of a weak legal system, and rampant corruption decimated public faith in the rule of law.
Many of these problems persist today, and as China has increasingly plugged in to the global economy, these trust issues, as well as issues surrounding corporate debt, credit, and accountability, have consistently created stumbling blocks that policymakers believe have stunted the growth of the socialist market economy.
The paper – which was supported by then-Premier Zhu Rongji and partially authored by researcher Lin Junyue (who has since earned the title “Father of Social Credit Theory”) – lamented the lack of “integrity” in the marketplace, an issue it proposed to solve through the creation of a nationwide credit system modeled on Western credit reporting frameworks, but expanded and adjusted for the Chinese context. The paper suggested a data-driven platform which would collect financial and behavioral data on companies and individuals, and which would be underpinned by a rewards and punishments mechanism to enforce accountability.
Though the paper had a lot to say about credit as it relates to individuals, it wasn’t so much focused on moral and civic “uprightness” as it was on honesty as the underpinning of a healthy market environment. Interestingly enough, the SCS as it exists today is almost identical to the one proposed almost 20 years ago.
In 2017, Wu Weihai, a key member of a think tank affiliated with the NDRC (the state ministry responsible for the implementation of the SCS), released a white paper called “Credit of a Great Nation” (大国信用). 2 In it, he breaks down the central government’s thinking on social credit, and dives deep into the reasoning that inspired the system’s construction.
Like other academics before him, Wu stresses that markets are made up of individuals. And a person’s willingness to fulfill their financial obligations can’t be divorced from their willingness to fulfill their personal obligations. Likewise, the trustworthiness of an individual can’t be divorced from the trustworthiness of society as a whole. Wu quotes a whole lot of Confucius in the course of explaining all this, specifically: “人而不信，不知其可也”, or:
“There’s no path forward for those that don’t keep their word.”
We’re paraphrasing here, but basically, he goes on to say that untrustworthy societies give rise to unstable markets and corrupt governments, corrupt governments function inefficiently and breed more distrust, unstable markets undermine social harmony, on and on in a vicious cycle. Since all three of these factors are interconnected and must influence each other, Chinese researchers like Wu believe they must be tackled with a common, holistic solution.
And that, in essence, is how Chinese policymakers have conceptualized the national social credit system: as an attempt to harness technology to effect that solution.