While the Social Credit Systems (SCS) is a distinctive feature of China’s approach to governance, its application in Europe would face significant challenges and concerns, particularly related to privacy, ethics, and security.
What was fiction in the Netflix series “Black Mirror” has become reality: The introduction of social credit systems in China has attracted worldwide attention. These holistic systems, which aim to incorporate analog and digital data as well as automation, are often compared to George Orwell’s dystopian work “1984” and described as a data dictatorship. But how sustainable are these systems? And could they work in Europe?
Overall, the systems present a complex challenge.
China’s Social Credit System
The Social Credit System (SCS) in China is a complex and multifaceted initiative aimed at monitoring and evaluating the economic and social reputation of individuals and businesses.
China’s SCS is a government initiative to assess and influence the economic and social behaviour of individuals, businesses, and other entities. Here’s a breakdown of how it works:
The system intends to monitor, rate, and regulate the financial, social, moral and, possibly, political behaviour of China’s citizens – and the country’s companies – via a system of punishments and rewards. The stated aim is to “provide the trustworthy with benefits and discipline the untrustworthy.” Each citizen is expected to be given a social credit score that will increase or decrease depending on whether the subject’s social behaviour is acceptable. Furthermore, foreign companies wanting to enter the Chinese market will be given a score.
As the system is still in a state of evolution, it is not possible yet to determine the consequences.
High Scores potentially can lead to fast-track promotion at work, priority for school, cheaper public transport, and tax breaks: For example, companies that are classified as an ‘Advanced Certificate Enterprise’ may receive faster customs clearance. ‘A-rated’ taxpayers may have their tax returns processed more quickly.
Whereas punishments are supposed to lead to denial of licenses, permits and access to some social services. As well as exclusion from booking flights: It was indicated that 23 million people were blacklisted from travelling in 2019. But perhaps the most shocking punishment, is public shaming with exposure either online or on TV screens in public spaces of the names, photos, and ID numbers of blacklisted citizens. As part of this public shaming, phone dial tones that inform people that they are calling a “dishonest debtor” have also been mandated by authorities.
It’s important to note that the SCS is still evolving, and its implementation varies across China. The first round of pilots was launched in 2009 and the roadmap planned in 2014, by 2019 it was agreed to speed up the building with a deadline set to 2020.
The central government’s version focuses more on financial creditworthiness and legal compliance rather than a comprehensive social behaviour score. The system has sparked significant international interest and debate regarding its implications for privacy and civil liberties.
However, the concept of a social credit system raises interesting questions about its potential impact on labour markets outside of China, such as in Europe.
Considerations in Europe
While no European country is currently considering implementing a system identical to China’s Social Credit System, there are discussions and experiments related to similar concepts. For instance, Italy has tested a “digital wallet” system aimed at encouraging eco-responsible behaviour. This system rewards citizens for actions like recycling correctly or using public transport. However, unlike China’s SCS, this initiative is optional and does not include sanctions for negative behaviour.
European Surveillance Concerns also highlights a broader conversation in Europe about the balance between surveillance, privacy, and incentives. Some observers draw parallels between China’s SCS and potential European initiatives that reward certain behaviours, though these are not as comprehensive or punitive as China’s system.
It’s crucial to recognise that any such system in Europe would have to navigate complex legal and ethical landscapes, including strict data protection laws like the GDPR, which may limit the scope and nature of any social credit-like system.
Public opinion on systems similar to China’s Social Credit System in Europe is mixed, with both support and opposition evident across different contexts and countries. The significant opposition
to the idea of a comprehensive social credit system in Europe, is mainly due to concerns about privacy, surveillance, and the potential for abuse. Critics argue that such systems could lead to discrimination and loss of individual freedoms5.
So, while there is interest in systems that incentivise positive behaviour, the European public is generally wary of any system that resembles the SCS in terms of surveillance and control. The debate continues as technology evolves and the need to balance security with personal freedoms becomes increasingly important.
Potential impact on the European Labour Market
Putting legal concerns aside, consideration of systems like China’s SCS leads to interesting questions regarding the labour market, especially when taking into account the current shortage of personnel. If a similar system were to be implemented in Europe, it could potentially affect the labour market in several ways:
First and foremost, employment decisions could be skewed by a social credit score system. Employers might use prospective candidate’s scores as part of their hiring criteria, potentially disadvantaging individuals with low scores, no matter their qualifications.
Secondly and in direct contrast to the above point,the labour shortage could tempt employers to overlook negative social credit scores to fill necessary positions, putting social scoring above educational background.
Thirdly,there are ethical considerations. The moral implications of such a system would likely spark strong debate, particularly regarding discrimination.
And finally, what happens, if a system like the SCS gets hacked and scores deleted and/or altered? The hacking of a social credit system could have serious implications including score manipulation where if points were altered or deleted, it could undermine the integrity of the system, leading to mistrust and social instability. There are also social implications: The erosion of trust in such a system could extend to online platforms and services, as users become wary of the security of their data.
Is a social credit score system viable in Europe?
In summary, while the SCS is a distinctive feature of China’s approach to governance, its application in Europe would face significant challenges and concerns, particularly related to privacy, ethics, and security. However, if implemented in a secure way, it might be a helpful tool, particularly when considering current insolvencies. Would banks and other lenders decide differently, if a company’s or an individual’s score of “trustworthiness” based on all kind of behavioural data, and not just credit scores, was negative?
Systems like these are an outcome of our technologies, many of them promising innovations integrating protection and resource management to help make our daily lives easier. This brief insight into the SCS illustrates that data collection provides useful opportunities in this matter, as long as the risk potential, i.e., data breaches, is handled accordingly.
With the correct (cyber) risk management in place, innovations such as these can offer new approaches to overcome current challenges, such as the labour shortage, by also considering possible useful (social) information and not just pure educational qualifications.
Sources:
Katja Drinhausen (2021): China’s Social Credit System in 2021: From fragmentation towards integration
Drew Donnelly, PhD (2024): China Social Credit System Explained – What is it & How Does it work?
Zeyhi Yang (2022): China just announced a new social credit law. Here it was it means
Wahagen Khabayan, The National Pulse (2022): A social credit system aimed at modifying climate change behaviours is being deployed in Italy
Pauline Elie, Philonomist (2022): In Europe, the temptation of surveillance
Nathalie Vdovychenko (2020): Will the Chinese Social Credit System be implemented in the EU?
Jonas Borchgrevink (2020): Hacking and its Legal Consequences
Marco Ballesteros (2023): Unveiling How Hacking Affects Society: Key Insights
Krystle Lippert
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GrECo International AG
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