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China expands reach of 'trustworthiness' system

Blacklists covering insurance, accounting and research already hold 14m names

SHANGHAI/HONG KONG -- The Chinese government is accelerating a nationwide campaign to create blacklists of individuals and enterprises it considers to be "dishonest," with some local governments adopting scoring systems that take into account factors such as a person’s willingness to donate blood. 

Beijing has already set up a "trustworthiness" system that assesses companies and people. As of 2018, more than 14 million individuals and businesses have been put on blacklists, which prevents them from buying land, issuing bonds and even taking public transportation. 

There are now 51 blacklists, including 18 newly added last year, covering insurance, accounting, statistics and other areas. More than 3.59 million new names of “dishonest" individuals and enterprises were put on the list last year, according to an annual report by the National Public Credit Information Center. 

These lists form part of a national initiative announced in 2014 to rank people by their behavior in the hope of cracking down on fraud, which the government has blamed on being a drag on Chinese society. The government plans to extend the net to cover the entire population by next year. While the threat of being put on blacklists could deter fraud and criminal behavior, Beijing's motives have also been questioned by some who worry that the system could be used to spy on and penalize individuals the government deems to be a threat. 

Rogier Creemers, an academic specializing in Chinese law and governance at Leiden University in the Netherlands, described the initiative as "perhaps the most prominent manifestation of the Chinese government's intention to reinforce legal, regulatory and policy processes through the application of information technology." 

Some local governments already record and grade a wide range of behaviors on systems they have designed. So far, more than 40 municipal cities have also launched the pilot program.

In the eastern city of Rongcheng, each resident is given a starting score of 1,000 points. People can gain additional points for behavior encouraged by the government, such as donating money to charities, while losing points for acts such as refusing to offer their seats to others more in need. The high flyers are given priority in many public services, while low scores affect people's social welfare benefits.

In Suzhou, another eastern city, individuals can receive up to 200 points based not only on their job status and financial assets, but also on nonfinancial factors such as whether they have donated blood, received a commendation or volunteered their services. High-scoring individuals enjoy perks, like longer use of shared bicycles and the ability to borrow more library books. On the other hand, a person can lose points for falling behind on utility bills, or for not showing up for hotel and restaurant reservations. 

Shanghai also has also launched its own system. City residents can enter their identification numbers into a mobile app called "Honest Shanghai" to check their social credit scores that are given based on their job status, social insurance payments, criminal records and other factors.

In additional to the government-led social credit system, China’s central bank also authorized eight commercial companies to roll out their own financial credit scoring systems. Sesame Credit, developed by Ant Financial, the finance arm of e-commerce giant Alibaba Group Holding, is among the most widely used scoring systems in China. The company collects data from Alibaba’s online ecosystem, which has over 700 million users, and analyzes users' credit trustworthiness using cloud computing and machine learning.

While Ant Financial denies any involvement in the nationwide social credit system, its Sesame Credit score is accepted bysome local public institutions such as public libraries as a reference to evaluate an individual’s reputation.

A spokesperson at Ant Financial said that Sesame Credit is an "independent, private, alternative credit service that evaluates the ability of a person to fulfill a commercial contract." It does not share users’ data with the government, nor has it supplied technology to build such a platform, the spokesperson said. 

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