This piece explores the extra-legal basis of China’s social credit system and the recent proposals to reform the scheme through a progressive vision of legality, consistency and clarity. However, the proposed developments struggle to substantiate how such ideals will be achieved in practice without any legislative mandate.
China’s social credit system (SCS) collates public credit data with the objective of increasing social, corporate and government trustworthiness by administering a range of incentives and penalties that motivate compliance with the law. The administration of the SCS varies regionally, as provincial governments enforce a localised criterion upon which public credit data is assessed. Notably, the SCS does not currently operate under a legislation mandate, but as a national policy scheme dually managed by the National Development and Reform Commission and the People’s Bank of China.
China’s SCS has been subjected to international challenge as an Orwellian structure, lacking transparency and a legal basis upon which individual freedoms are trumped by national interests. From a procedural standpoint, there is concern around the lack of codification in the extra-legal system; there is no comprehensive definition of ‘untrustworthy behavior’, nor a clear and consistent penalty scheme upon which questions of proportionality can be directed. In this way, procedural fairness is flouted as there is no way to critique a penalty system that is not codified in law, nor is there a clear process of appeal or right to recourse for those blighted by the system.
China’s progressive adoption of a SCS affronts the challenges, and potential opportunities, arising at the intersection of algorithmic intelligence, public ethics and legality. Whilst China navigates international allegations of arbitrary punishment and blacklisting practices, it has catalyzed a discussion of a new governance instrument that may pave the way for an investigation of the power of such data collection technology.
The conflict between individual rights and collective national interests is firmly settled with the latter prevailing in the current formulation of the SCS. China’s Constitutional preservation of the ‘Interest of the State’ and ‘Integrity of the Motherland’ (Arts. 51 and 54, respectively) effectively subdue any competing individual rights of ‘privacy of correspondence’ and ‘freedom of speech’ (Arts. 40 and 35, respectively) protected in the Constitution. Thus, the collective national objectives of the regime, based on ambiguous norms of sincerity and trust, validate the SCS as a trust-based regime that should ‘allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.’
The proposed reforms to the social credit system
On July 22, 2020, the two managing bodies of China’s social credit system databases (the National Development and Reform Commission and the People’s Bank of China) released a document calling for public comment on the legal formulation of the SCS. The report, titled “Guiding Opinions on Further Regulating the Scope of Inclusions in Public Credit Information, Punishments for Untrustworthiness, and Credit Restoration to Build Long-term and Effective Mechanisms for Establishing Creditworthiness,” (‘the report’) proposes a number of developments to ‘improve the legalization and standardization’ of the SCS, covering the scope of credit information collected, the punishment scheme and credit restoration.
A significant deficiency of the current formulation of the SCS is the lack of codification. The absence of a clear and accessible classification of “untrustworthy” behavior and a corresponding penalty scheme (for both individuals and corporations) is acknowledged by the report. The report invokes the need for punishments to proportional and ‘clearly defined’, but simultaneously, that punishment should be considered in the context of its ‘severity…and impact’, without addressing the factors upon which severity can be measured by. Without understanding what offences evoke the controversial restrictions upon free movement at the individual level, or how trustworthy corporate behavior can attract corresponding benefits such as tax breaks, both individual and legal persons are subjected to a cloudy system administered by reference to vague nationalist norms. It is this ambiguity that characterises the broader application of the SCS, at least until it is clarified in a legislative instrument.
Similarly, the report identified the need for the SCS to exist ‘under the rule of law.’ However, the current formulation of the SCS is administered outside of any legislation and the report offers no clarification as to how any national legislation scheme should be formulated. It also fails to acknowledge how the rule of law, with its inherent elements of clarity and consistency, aligns with the geographic discretions of the SCS, where local governments draft their own point system to assess public credit data, effectively creating ‘de facto rules’ of reward and punishment. The policy scheme does not yet enjoy the quality of law, and the report shines no light on any pending relevant legislation.
Finally, no right of recourse is embedded in the scheme. The report offers support to the principle of finality, noting that an individual will be ‘removed from the untrustworthy list in a timely manner…and the sharing of the information will be terminated’ upon meeting relevant credit repair conditions. However, no such conditions are identified, and the onus placed upon the individual to restore their credit rating remains ambiguous, potentially relegating individuals to a ‘blacklist’ for an indefinite period.
The proposed reforms call for the need for the scheme to reference ‘international practice…promote measures in line with international standards’ and comply with ‘the vital interests of individuals and corporations.’ However, the absence of any reference to the substantive international standards and vital rights in question leaves an impression that China will selectively interpret the practices and rights that align with its sovereign interests.
China’s non-ratification of the International Covenant on Civil and Political Rights (ICCPR) has been a long-standing topic of critique; if the ICCPR was ratified, it would render fundamental rights justiciable. However, this is muddied by the fact that the SCS is a policy scheme, which Professor Xingzhong Yu notes would ‘prevail over’ justiciable laws themselves in a model of state legalism. Professor Leila Choukroune considers how ‘stabilizing law’ in China, which includes legislation and policy mechanisms that prioritise social harmony, ‘bring no universal claims…it limits itself to the border of Chinese society’ in her 2016 publication. This perspective would position the SCS as effectively only within the purview of China as a sovereign policy scheme, not intended for challenge under instruments like the ICCPR. Interestingly, this unique legal consciousness must find a balance with China’s role in a globalising world, and this report does reflect an attempt of further ‘institutionalising and internationalising’ the legal landscape.
The report perceivably attempts to balance the scales between the national interests elevated through the SCS and desirable principles of fairness and transparency for the individuals and corporations living and operating under the mandatory scheme. The references to principles of proportionality, consistency and transparency are hopeful, but ultimately it fails to enlighten the international community as to how such quixotic statements of individual rights will be regulated and enforced.
Katie Jones is a fourth year LLB student at the University of Sydney, where she holds a Bachelor of Commerce (International Business major) from. Katie has an interest in international law, particularly as it relates to China, following her policy research work with the South China – Australia Chamber of Commerce, and analysis of the South-China Sea dispute as an Asia-Pacific Crisis Advisor with the Organization for World Peace.