Enforcing Law and Norms for Good Citizens: One View of China’s Social Credit System Project

Abstract

Despite widespread mischaracterization and misconception about its policy objective and content, China’s social credit system project at this point consists primarily of a set of new approaches to enforcing conduct norms that already exist in the country’s multi-layered legal and extralegal norm systems. This essay explains such enforcement logic inherent in the project’s application to regulating behaviour of individual citizens. It also argues that the project’s implementation of its envisioned new enforcement paradigm is foremost challenged by design difficulties.

Taking Credits for Good Citizens

China’s social credit system project (hereinafter the ‘SCSP’)¹ has been widely mischaracterized and misconceived in the West as the real-life incarnation of a popular Black Mirror episode, Nosedive, which depicts a dystopia where citizens are scored for every aspect of their personal life (Bruney 2018). Such perception is misinformed on many levels. First, the SCSP has placed its paramount focus so far on regulating business and corporate practices rather than individual conduct. Second, there has not been in existence, nor design of, any system of ubiquitous scoring; the dominant approaches taken by government authorities in implementing the SCSP remain blacklists, ‘red lists’,² and joint sanction and reward (‘JSR’) schemes that, to a large extent, reinvigorate and upgrade pre-existing mechanisms of inter-agency collaboration. Third, despite often intuitively associated with the hype about China’s use and abuse of facial recognition and other AI applications, the SCSP has by far not seen such technologies being widely or substantively deployed for its implementation or operation. The scary picture of SCSP being a tech-driven, omnipotent control apparatus over individual citizens, therefore, reflects often not much on China’s reality but more on the Westerners’ acute sense of anxiety about their own fate in the data society (Zuboff 2019).

That does not mean, of course, that the SCSP’s regulatory effect is never felt, or not intended to be felt, by individual citizens. Aside from discourse and propaganda promoting sincerity, trust, and good citizenship, the SCSP embraces a range of policy initiatives that purport to practically regulate individual behaviour. For starters, many credit-based regulations over business and corporate practices rely on measures against individual citizens behind corporate entities. For example, when corporate entities are blacklisted for defaulting on court judgments, in addition to such organizations being subjected to sanctions and disqualifications, owners and executives also face spending restrictions on travel, vacation, and private schooling for children.³

Moreover, both central and local regulators have explored using credit-based sanction and reward mechanisms to incentivize individual behavior. The very basic form of such programs target activities in specific domains. The blacklisting and JSR schemes against individuals who intentionally default on court judgments are a leading example. And as JSRs proliferate and evolve towards a greater level of integration, systems also emerge to use rating or scoring systems to both measure and regulate multiple dimensions of individual behaviour. The municipal credit scoring regimes, illustrated by high-profile implementations in coastal cities such as Suzhou, Fuzhou, and Xiamen,⁴ represent such a minority approach to SCSP implementation.

Such components of the SCSP that involve direct intervention into the life of individual citizens, as this essay hopes to explain, should be best understood as the Chinese government’s attempt at addressing its perceived failures of enforcing both legal and social norms in the realm of public governance. Much less exotic than the popular yet misleading Orwellian narrative, to see the SCSP’s policy logic through such a developmental lens is not only more accurate descriptively but also helpful in shedding light on down-to-earth, real questions on which serious research is still outstanding: How is the SCSP’s approach plausible for promoting good conduct norms for citizens? To what extent will such approach work, if at all?

The Law-Abiding Citizen

The English term ‘social credit’ is a far from perfect translation of the Chinese phrase ‘shehui xinyong’ (社会信用). While the word ‘credit’ in English may not connote as broadly, its Chinese counterpart ‘xinyong’ (信用) encapsulates a host of lofty moral virtues as trustworthiness, promise-keeping, norm abiding, integrity and decency that apply to almost all contexts of social life and interactions.

Despite such a thick layer of moral camouflage, the SCSP’s paramount intervention in individual behaviour are premised on enforcing conduct norms that are otherwise already instituted in legal forms. In one highly illustrative case from the summer of 2018, Mr. Sun He suddenly found himself the subject of a wildly popular meme on social media, commonly referenced as the ‘Seat Occupier’. While traveling on a high-speed train, Sun insisted on sitting at a window seat that was not assigned to him. The passenger that originally purchased the ticket to this seat, after objecting to Sun to no avail, used her phone to shoot a video of Sun talking nonsense during their confrontation and posted it on social media. Sun’s behaviour and attitudes were perceived by netizens as obnoxious and offensive and he subsequently became the target of a large-scale public shaming campaign.

One immediate reaction by observers of the Seat Occupier episode may be to inquire where law enforcement officers were. In fact, railroad attendants and security personnel were called to the scene. But not only had they refrained from taking any forcible approach, United Airlines-style, but they apparently felt incapable of doing anything other than trying (and having failed) to talk Sun out of the seat. Eventually, Sun was subjected to sanctions imposed by government authorities: He was fined RMB200 for engaging in disruptive behavior in public, and subsequently also earned a negative entry to his ‘credit record’ (xinyong jilu) at the railroad authority, facing as a result bans from boarding many types of trains.⁵

With its high drama, the Seat Occupier case illustrates the general policy logic that has motivated the SCSP. Although it is common to presume that the Chinese government, through the SCSP initiatives, aims at expanding its power into terrains traditionally reserved for the informal governance of morality, the SCSP in fact targets foremost conduct that already violates pre-existing rules and requirements in the state’s thicket of laws and regulations. What Sun the Seat Occupier did is not just obnoxious as a matter of transgressing civility norms—it was a violation of the railway system’s administrative rules in specific and laws against disruptive behavior in public space in general. But without the new sanctions introduced through the SCSP, a fine of RMB200 as per established administrative sanction would have been utterly inadequate as a deterrent against similar commonplace behaviour. The SCSP-based sanction, therefore, is simply to strengthen the enforcement of previously ‘toothless’ legal norms.

In such light, the SCSP is more appropriately viewed as the latest installment of the Chinese government’s ongoing battle against the country’s intractable, long existing regulatory problems. While hundreds of thousands of laws and regulations have been enacted since the late 1970’s, many that are purported to constrain socially harmful activities are believed to have failed to impose meaningful behavioural constraints due to their inadequate enforcement. This inadequacy has in turn been attributed to certain stubborn pathologies in the Chinese government. First, although continued investment in government ICT has equipped a growing number of government bodies in China with more sophisticated systems and applications, the overall operational efficiency of China’s government information and data practices still has considerable room for improvement. The persistent problem of ‘information silos’, despite rounds of efforts to tackle it, remains a cause for significant internal and external frictions that hamper the delivery of policy and regulations.⁶ Second, beyond technology, many government actors are constrained in other aspects of resources required for undertaking their regulatory functions. Agencies tasked with enforcing regulations constantly complain about being understaffed, underfunded, or not being given necessary authority to use coercive power (Chen 2015). Third, that laws and regulations in China do not work as well as intended has been attributed also to the usual agent-control problems, such as corruption, arbitrariness, shirking, or simply bureaucratic incompetence.

These pathologies must be familiar to students of law and government in low and middle income countries (Peerenboom and Ginsburg 2014), and the SCSP represents the Chinese government’s direct responses to the same: It addresses the deficiencies in government information technology and data practices by investing in better ICT infrastructure, straightening out government data collection practices, and promoting inter-agency data sharing; it tackles regulatory under-enforcement by both mobilizing private sanctions and pooling resources of multiple public agencies; and it approaches the government integrity and competence problems by incorporating certain data-driven and automation decision techniques, and bolstering external and internal oversights on government behaviour.

Through these efforts, the SCSP aims to set up an infrastructure for greater level of enforcement and, hence, compliance. As national and local government agencies have become drawn to the use of blacklisting, rating, scoring, and JSRs to tackle ‘trust-breaking’ problems in a range of domains, it is important to see clearly why ‘laolai’ (老赖) and other types of ‘trust-breakers’ came under the SCSP enforcers’ radar: It is not just that these individuals are assessed as morally unreliable, but that they are failing to abide by laws and regulations that are widely perceived as inadequately enforced.

Norms and Law

Nonetheless, it is not untrue that the SCSP has packaged certain lines of efforts that are conceptually more exotic, at least to Western eyes, than merely strengthening existing regulations through inter-agency coordination and enforcement collaboration. Take blacklisting mechanisms, the most basic and well-established format of SCSP mechanisms, as an example. As a pioneer, the Supreme People’s Court set up a first nationwide blacklist programme for ‘trust-breaking enforcement subjects’, referring to individuals and firms that out of bad faith fail to abide by court decisions. From time to time these individuals are subjected to general public shaming by having their names displayed on large LED screens in train stations or on the exterior of public buildings. Some local courts have even partnered with telecom carriers to unilaterally change the blacklisters’ cell phone ringtone so that whenever such individuals receive a call the phone will ring to announce, to anyone nearby, that the phone’s owner has been blacklisted.⁷

Mirroring the blacklisting systems, which leverage sanctions imposed by entities outside of the government, are various schemes that aspire to incentivize, with externally sourced benefits, government approved pro-social behaviours. For example, in 2016, Internet giants such as Baidu, Tencent, and Alibaba all committed to participating in a joint reward programme set up by the Communist Youth League (‘CYL’). Besides offering platform purchase coupons, Baidu and Tencent also agreed to give hiring preference to ‘outstanding young volunteers’ the CYL designates under this scheme.⁸

More systematically, various municipal credit score programmes also aim to connect good behavior with positive benefits from both within and outside of the government. For example, Fuzhou, the capital city of Fujian Province, partnered with JD Finance to set up a micro-version of credit city called ‘Three Neighborhoods & Seven Alleys’ (san fang qi xiang), within the parameters of which local residents may be given preferential access to certain government and business services by using their ‘Jasmine Points’, a score issued by Fuzhou municipal government for commendable behavior such as abiding by the laws and doing voluntary works.⁹

To conceptualize, these programmes can be thought of as the government’s attempt at drawing on both negative and positive incentives traditionally not in the government’s possession. Meanwhile, the SCSP at times also envisions that the Chinese government throws its own resources to back extralegal norms that are perceived as failing. Such is best illustrated by some eye-catching efforts at integrating SCSP mechanisms and the local norm systems. For example, in Qingzhen City of Guizhou Province, one of the least developed provinces in southwestern China, the government has since as early as 2010 started its so-called ‘Honest Farmer’ programme, through which it hopes to incentivize rural residents’ compliance with ‘the good moral norm of promise keeping’.¹⁰ Local authorities have sought to condition government incentives, such as agribusiness loans, subsidies and other types of local and residential benefits, on evaluations of individual rural residents and households against a set of publicized village norms.¹¹ Such ‘village norms’ regulate matters both within and outside of the ordinary reach of formal law and regulation. Some village norms reiterate legal requirements for observing contractual obligations, family planning regulations, construction and transportation safety regulations, and the like. Other norms, in contrast, are not of typical government concerns even in China, such as those on ‘harmony within the family’, ‘good neighborliness’, ‘diligent work ethics’, or against lavish spending on weddings and funerals and littering. While in recent decades such village norms’ constraining force has generally declined, localities such as Qingzhen hoped to reinvigorate these norms by backing them with high-powered government incentives.

Western audiences may perceive such programmes as merely authoritarianism with Chinese characters. Nonetheless, to systemize norm mechanisms through government intervention is in fact no Chinese invention. The institutional logic underlying these SCSP programmes resembles what has long been theorized in the law and social norms literature, where ‘normative failure’, meaning that informal norms whose substantive content reflects community consensus are underenforced, is quite commonly addressed by government intervention with legal coercion (Cooter 1997). When government seeks to back apparently failing norms, as such theory describes, norms then become transformed into the law.

That said, what may distinguish China from others is that Chinese government entities sometimes attempt at wholesale incorporation of moral norms into legal forms. Since 2013, for example, a wave of so-called ‘civility legislations’, (Cai 2018). taking place most often at the provincial and municipal levels, tend to prescribe for norms applicable to a variety of rather petty daily life matters, such as following elevator etiquette and doing what Romans do when being a tourist abroad. While local regulations differ slightly in their approaches, many specify or imply that SCSP-based sanctions and rewards are expected to be the primary mechanisms for enforcing the legalized civility norms.

Every time social norms become widely incorporated into legal forms and enforced by incentives produced with government carrots and sticks, the pre-existing boundaries between norms and law become redefined, which will expect to lead to concerns about reduction in individual autonomy. But in China’s case, one must note that boundaries between formal and informal governance have never been rigid. Taken together, what these SCSP programmes aspire to achieve is to seemingly transform the state into a behavioural regulatory platform that aggregates all available incentivization resources, irrespective of such being legal or extralegal in the traditional sense and allocates them to places where good norms of conduct are in want of greater enforcement. Provided that the technological and institutional infrastructures are adequate, the SCSP sheds light on a high level of unification between law and norms, which implicates a novel paradigm for behavioural regulation.

Paucity of Design

Although both ‘credit’ and ‘trust’ appear to reference ideals with a moral substance, as the foregoing examination should have revealed, the SCSP at this point consists foremost of a set of new approaches to enforcing conduct norms that already exist in the country’s multi-layered legal and extralegal normative systems. The harder normative question here, meanwhile, is whether a greater level of enforcement, if achievable at all, can also be desirable.

The answer surely will depend on whom one asks, but context indeed matters as to where more stringent enforcement of laws and norms are sought after. Obviously, having law and regulation in some areas bite harder could be quite beneficial because China, similar to many other low and middle-income countries, still wrestles with the problem of deficient legal protection of person, property, and the environment against fraudulent and opportunistic behaviours (van Rooij and McAllister 2014: 288). The majority of the public will likely also agree that such offensive behavior as that of the Seat Occupier, as previously described, call for stronger disincentives than a fine which equals merely the cost of the train ticket. And given China’s notorious problem with enforcing court decisions, there is also a case for even overt public shaming if that’s what it does take to uphold the judiciary’s stature.

But all cases of under-enforcement are of course not equal. In the abstract, near perfect enforcement of laws and norms, even were it attainable, is not necessarily optimal. Not only might the direct cost of enforcement action be high, but some breathing room from full compliance is almost always needed to accommodate certain disruptive but creative responses to the existing order (Cohen 2013). Both individuals and business firms in China, as is well known, have long managed to exploit authorities’ laxity in enforcing formal laws and regulations for breathing room to exercise individual liberties, make practical business arrangements, and explore market and technological innovations. For example, the rise of China’s Internet giants in the late 1990s and early 2000s, as some have argued, is attributable to the lack of stringent enforcement of copyright laws (Hu 2016).

Likewise, where the government seeks to reinforce norms on the premise of certain ‘normative failure’, that is also never easy to do right. Ideally speaking, for optimal design and implementation, a programme as such first has to correctly identify and target the type of ‘failing’ norms that are actually worth backing with government incentives. Otherwise, public resources are easily spent on supporting norms that are obsolete, inefficient, or even repressive. Second, as government incentives are inserted to induce optimal behaviour, it is also difficult to ensure that such incremental inducement is adequate to make a difference and meanwhile not excessive or perverse. Third, there needs be practicable and concrete logistics for collecting the behavioural data and running the norm-based evaluation mechanisms. In particular, if government actors look to tying a greater amount of public resources to social credit information generated through the often-crude local governance process, the risk of biased and arbitrary reporting could then loom quite large.

Besides, one must also realize that despite the empowerment of technology, at any given point of time, a universal strengthening of enforcement is also not practicable. Indispensable for running any social credit programme are in fact the carrots and sticks that are tied to the credit information. Although their availability is often taken for granted, none of the sanctions or rewards are free. For example, restraining bad-faith defaulters of court decisions from ‘luxury’ spending in fact leads to added cost to be borne by operators of transportation services, lodging, and entertainment establishments. Such cost is much less transparent than those of tech procurements for setting up the SCSP databases, but that money will also have to come from somewhere. Since resources for enforcement and its enhancement at any given point must be scarce, wise allocation remains the key for the new paradigm.

Therefore, to the extent that universal strengthening of enforcement is neither desirable nor feasible, mechanism design becomes most critical in order to properly distinguish existing norms that justifiably need greater enforcement from those that do not require further backings. That in turn calls for more substantive thinking and judgments: What conduct norms, either legal or extra-legal, will produce most socially beneficial results once supported by high-powered enforcement tools made available through the SCSP?

That is where one finds, however, only paucity at this point. The central government, in its over-arching policy blueprint unveiled for the SCSP in 2014, described only in broad stroke that commerce, government, judicial, and societal credit are the four areas where good conduct norms must be made more stringent. Despite its pronounced intent to start with these ‘focus areas’, the four ‘areas’ in fact are so broad that they basically cover all corners a government’s law and governance apparatus may potentially reach. And as the SCSP has by far been implemented through primarily decentralized efforts, nationwide, coordinated design efforts are in particular lacking on what must be prioritized and what needs not as it comes to the application of SCSP-based enforcement tools.

At the local level, the lack of design capabilities presents also a major bottleneck for many of the conceptually novel programmes. Designing rules and formulae for generating and using credit-based behavioural regulation is no easy task. Local government’s point systems often rely on a crude scoring process that can be no more rigorous than aggregating scoring rules and decisions from different sectoral departments. Under these systems, one certainly does not see much coherent logic in how points are assigned to different behaviours, and there is most likely no inherent logic for subtracting five points for hiring underage workers whereas 10 points for selling substandard coal product. It is not surprising therefore that, as anecdotes suggest, such scoring systems, for their crude and arbitrary nature, have often been worked around by not only local residents but also authorities themselves. Even where some of the more sophisticated local scoring models, such as that of Suzhou, may appear to be emulating private scoring systems,¹² the former’s model inevitably will consist of behavioural norms different from the latter’s, hence calling for new design as opposed to simply copy-and-pasting. It is at this point largely opaque as to how these newer scoring models have become designed and what behavioural effect these more complex point systems have already generated.

Fears, and Hopes?

The ideal of good citizenship for all societies must commonly entail a set of norms for individual conduct as well as a reasonable expectation for the public’s adherence to the same. But whenever government authorities appear assertively interested in seeking such norms’ enforcement, many individuals will undoubtedly be highly alarmed. In the SCSP’s case, despite the generally supportive sentiment among the Chinese public towards using the SCSP to curtail ‘trust-breaking’ behaviour, (Kostka 2019) controversies have indeed arisen over an increasing number of reported incidents where SCSP-based regulatory tools appear to have been abused.

One best-known story, spreading widely across social media platforms since 2017, involves a prospective college student who, despite scoring high enough in the national test, got his admission to a prestigious public university in Beijing almost denied because his father was blacklisted by a local court. This story has by far become a favorite among not only pundits but also legal experts who believe the SCSP has gone out of hand. To sanction children for their parents’ failure of legal compliance is indisputably excessive. The only problem here, however, is that the story was ‘fake news’ and has been repeatedly debunked; the student had different names in the various versions of such story, and no one has been able to identify the public university involved.¹³ Moreover, as a matter of law, no government authority has the power through the SCSP to deny public college admission to the family member of a ‘laolai’; restrictions imposed by the SCSP against such individuals are to prevent them from enrolling their children in private schools that charge expensive tuition.

The point here is of course not to deny the risk of government overreach through the SCSP. Instead, it is to show that imagining how things may go wrong for a policy project as such is not at all hard for even those who otherwise knew little about the fact. By contrast, it takes much harder efforts for policymakers and officials to navigate and overcome the design challenges before the SCSP could actually produce meaningful and beneficial behavioural effects. The tension between fears and hopes can expect to reveal itself ever more conspicuously as the SCSP’s implementation continues to proceed.