In Urban China today everyone pays for everything with their phones. At McDonald’s, the convenience store, the restaurant, everyone is using their smartphones to make payments. Cash has been largely replaced by two smartphone apps, Alipay and WeChat Pay.
To get an Alipay ID, a new subscriber just enters their phone number and scan their national ID card. Alipay had built a reputation for reliability and with just a few clicks the sign-up procedure is completed matching Alipay’s “Trust makes it simple” slogan.
Many young Chinese who had become enamoured by this mobile payment service no longer carry wallets or purses. They pay for everything online and as a result there is a large amount of data available. The Alipay home screen now has another icon labelled Zhima Credit (or Sesame Credit). The name, like that of Alipay’s parent company, evoked the story of Ali Baba and the 40 thieves, in which the words open sesame magically unseal a cave full of treasure.
The People’s Bank of China, the country’s central banking regulator, historically maintained records on millions of consumers, but they often contain little or no information. In 2014, the State Council, China’s governing cabinet, publicly called for the establishment of a nationwide tracking system to rate the reputations of individuals, businesses, and even government officials.
The aim is for every Chinese citizen to be trailed by a file compiling data from public and private sources by 2020, and for those files to be searchable by fingerprints and other biometric characteristics.
For the Chinese Communist Party, social credit is an attempt at a softer, more invisible authoritarianism. The goal is to nudge people towards better behaviours ranging from energy conservation to obedience to the party.
In 2015 Ant Financial was one of eight tech companies granted approval from the People’s Bank of China to develop their own private credit scoring platforms. Zhima Credit appeared in the Alipay app shortly after that. The service tracks your behaviour on the app to arrive at a score between 350 and 950 and offers perks and rewards to those with good scores. Zhima Credit’s algorithm considers not only whether you repay your bills but also what you buy, what degrees you hold, and the scores of your friends.
For the more than 200 million Alipay users who have opted in to Zhima Credit, the sell is clear: Your data will magically open doors for you. Participating in Zhima Credit is voluntary, and presently it’s unclear whether or how signing up for it could affect an individual’s rating in the government system.
Zhima Credit has already co-operated with the Chinese government in one important way: It has integrated a blacklist of more than six million people who have defaulted on court fines into Zhima Credit’s database. According to Xinhua, the state news agency, this union of big tech and big government has helped courts punish more than 1.21 million defaulters, who opened their Zhima Credit one day to find their scores plunging.
In recent months Chinese regulators have taken steps to exert more control over tech companies. Last August, the People’s Bank of China ordered mobile and online payment companies to connect to a central government clearinghouse, giving regulators access to all transaction data.
Big brother and an Orwellian world has arrived.