CLOUD COUNTRY

Eyes in the sky: How China’s future is always online云中的国度：大数据时代有无现金的便利，社会信用体系的建立，但也有个人信息泄露的隐患

Lazy landlords. Unreturned deposits. Rude passengers. Dodgy deals. Few can say they’ve not had problems arising from a breach of trust—from strangers refusing to acknowledge the “social contract” to business partners absconding with goods. The government argues that many of the problems in China’s maturing economy can be fixed with a credit rating system, in which everyone’s “brand” is judged according to an algorithmic ranking.

While similar to the FICO system in the US, these proposals go several steps further, with the finished system ranking not just one’s credit history, but other areas such as “government

affairs,” “commercial sincerity,” “social security,” and “judicial credibility,” all for the purposes of “correcting unhealthy trends and evil practices of abusing power for personal gain…benefiting oneself at others’ expense.” These terms are not clearly defined, there are pilot programs that take the “social” aspect of the system to extremes, figuring one’s acquaintances into calculating the final number, and creating what some consider a caste system with uncomfortable historical connotations.

You can’t say social credit without credit. E-commerce lies at the center of China’s credit prototypes, as the country has rapidly embraced the idea of a cashless society. The system is fast, convenient, and hassle-free— all things that Chinese consumers love. China invented paper money, and hard currency has been around for centuries, but what are the advantages and disadvantages of this new form of payment that has already become ubiquitous? Should we be quite so quick to abandon a system that’s been around for centuries? Over the next few pages, TWOC examines how e-commerce and social credit are changing our lives, and creating a wealth of data that affects all of us—big or small.

their privacy, this is increasingly true. “Even at the turn of the century, you wouldn’t put your face up online, you wouldn’t use your real name. Nowadays, we put up our faces, where we’re from, our faces’ names, our lives.”

In China, moreover, web platforms whose main selling point is communication under users’ real names—networking tools as Renren or Tencent’s Qzone and defunct Qqclassmate—pale in success to those that practice “background real name, foreground voluntary,” which include the likes of Wechat, QQ, Weibo, and online forums. This phrase was essential to the “network management real-name policy,” initiated by the National Internet Information Office in 2015 and came to include all SIM card registration—and services that require a phone number to sign up. Netizens wary of revealing their lives to one another nevertheless opt to entrust their identity and information in data form to the company; laws currently protect only against the direct dissemination or modification of a citizen’s personal information.

In 2012, during the pilot stages of the real-name policy, Wang Chen, then director of the National Internet Information Office, explained the policy as being instrumental to “civilized internet usage”—a measure to protect against the spread of “unreasonable” or harmful information and challenges to social harmony that could occur under the cloak of anonymity. The State Council’s 2014 proposal for the social credit system, in which real-name registration will play a great part, was similarly framed in terms of increasing “trust” and creating a “sincerity culture” in Chinese, currently mired in corruption, fraud, and low trust among strangers.

The public’s feelings about these measures are mixed. In 2010, when real-name registration was being proposed for mobile phones, a survey by Yesky.com found that 56 percent of respondents were opposed to the measure, while a Netease survey the same year found nearly 70 percent in support of the measure (and most of the opponents were “youths”). An online survey in 2014, shortly after the State Council’s release of the planning document for social credit, found that 59 percent of respondents supported the concept of a social credit score, while 29 percent were mutual and 11 percent opposed.

As early as 2010, however, the county of Suining in Jiangsu province had established its own citizen-scoring system—a move that dozens of cities, from Xiamen, Fujian province to Wenzhou, Zhejiang province, are planning to replicate—that Chinese media nicknamed a “modern caste system.” The stipulation that “points” would be removed for “besieging government offices” and “bringing false accusations” could target petitioners, and one local complained that people were being awarded points for “attracting business and investment” to the county. However, other projects, such as a debtors’ database predicted to be in place at a provincial level by the year’s end, or the city of Zhengzhou recent pilot project to rate the credibility of construction companies, appear to be deliberate efforts to satisfy citizens’ most pressing social concerns.

One reason for the apathy over privacy could simply be that even the most reluctant of consumers are in too deep to opt out of the data revolution now. Early this year, a 72-year-old Suzhou man surnamed Zhu became an unlikely celebrity when he submitted a 1,500-character, handwritten letter to his local paper on how mobile payments were leaving the elderly and technologically illiterate behind: “I increasingly feel that avoiding modern tools is unwise; today, technology and life are increasingly connected, bringing us unimaginable convenience and benefit…[i hope] seniors will be able to keep pace.”

Alipay, however, responded by launching a campaign to locate Zhu and personally presenting him with an “Alipay Introductory Guide for Parents.” The formerly uninitiated elder was last reported to be running a mobile payment course for his fellow senior citizens.

interest loans, with the threat of the embarrassing images being deliberately leaked if borrowers default on their repayments.

With an improved social credit score, users have a better shot at securing loans from P2P lenders, and also have improved odds of getting perks from the data giants themselves. Alibaba, for example, also has an Alipay loan program, and a travel service called Alitrip that makes use of Sesame Credit scores to allow people to book hotel rooms without deposits. Other perks can include upgraded services, access to fast-track services, and discounts.

Essentially, this means that prototype social credit schemes are already in operation, and they attempt to add a degree of trust to the chaotic nature of the private lending industry in China. But they’re incredibly fragmented, and there is very little supervision over the billions of RMB whizzing around the cloud.

This is part of the reason why the authorities have now moved to make all online payment processors— including giants like Alipay, which has 400 million registered users—feed transactions through a centralized, state-run clearing house by June 2018. The move has been widely interpreted as a loss for the big-data giants, as their hoarded data becomes available to the authorities or other third parties.

There are reasons to be wary even before this happens. An investigation by the Beijng Zhishui Technology Company, a finance consultancy, found that, for just 400 RMB (60 USD), certain operators claim they can completely reset the nine criteria that make up someone’s Sesame Credit score. This can include credit ratings, property ownership certificates, and driver’s license details. Other criteria can include the contact details of referees at a company, as well as occupation and any educational certificates you may hold.

The company’s investigation interviewed one “black credit” score modifier, who said that together with his hacking partner in crime, the pair had made 200,000 RMB in a single month by selling these services through Taobao. The deal comes at a significant risk: Users have to hand over their Alipay login information and passwords to allow hackers to alter their personal details, effectively granting them total access to their accounts.

But the potential rewards are tempting: The report included screenshots purporting to show someone with no credit score becoming the owner of a BMW and two apartments, as well a degree from Peking University. The fake identity—a wealthy overseas Chinese returnee to China with an excellent credit score—was repurposed from a trove of real personal information gathered over many years, and used to fill in blanks on social-credit forms.

Whether or how these modifications actually work, however, is still unclear. In online forums, customers swapped stories, with most experiencing little change in their credit score, or instead seeing their scores gradually improve over time, rather than all at once. A representative of Sesame Credit told the company’s investigators that new information is verified only after it is submitted, offering no firm conclusions either way.

The hacker, however, did reveal what may become a recurring Achilles heel in years to come: “Information managed by different government systems cannot be cross-checked, such as the certificate of property

ownership and the ID card,” he told the company.

The social credit system is almost certain to centralize existing databanks, but beyond that, it may also make guesses about people’s character based on their purchase history. “Someone who plays video games for ten hours a day, for example, would be considered an idle person,” Sesame’s Technology director Li Yingyun told Caixin. “Someone who frequently buys diapers would be considered as probably a parent, who on balance is more likely to have a sense of responsibility.”

Concerns about the merits of these sort of metrics have prompted Beijing to reconsider how the PBOC might license scorers in the future, as have the lack of data-sharing among giant companies who operate rival e-commerce and online financing arms, making a comprehensive credit score far less likely. Financial experts also warn of a “cashless society” where “an individual’s purchasing power, and their value to the consumer system, can be determined by his or her demographics, online behavior, and choices,” as one former banker wrote in the South China Morning Post in October.

These concerns have not stopped millions of Chinese, young and old, from joining the cashless revolution: Today, 40 percent of Chinese carry less than 100 RMB in their pocket, and use apps to pay for meals, rent, airline tickets, taxis and bicycle shares: 86 percent of respondents told Tencent they had no concerns about being without cash, as long as they had their phone. But what if their phone is stolen or hacked? What if they are locked out of their Wechat account, or the Wi-fi suddenly goes down? And these are just the most pragmatic of worries.

Google ranks websites according to which other sites they are linked to, and Facebook suggests social groupings through mutual friends, so it is perhaps unsurprising that Sesame’s proposed social credit system will define people by their “interpersonal relationships.” Exactly what this means is still unclear, beyond the ominous announcement that it will assess “positive energy.”

But perhaps the biggest aspect of the entire social credit scheme has gone almost entirely under the radar. At the end of October, the Standing Committee of the National People’s Congress considered a law that would require vendors to seek approval before going online. A key aspect of this law would involve instituting some of the first taxes on e-commerce transactions which, at present, are unregulated and thus untaxed—which goes a long way toward explaining how and why China’s e-commerce sector has exploded.

But in order to develop a social credit score, the current prototypes already rely on measuring people’s transactions, and will thus increase the transparency of the entire e-commerce sector—making things much easier, at least, for the taxman.

FOR JUST 400 RMB, HACKERS CAN COMPLETELY RESET THE NINE CRITERIA THAT MAKE UP SOMEONE'S SESAME CREDIT SCORE