China Eyes Big Data To Build Social Credit System

China is tapping into Big Data to build a robust social credit system for its citizens that will be used to calculate credit scores derived from lending and payment history and a person's digital footprint.

The credit system's use will extend beyond just being a credit rating system and could be used to provide information on different aspects of the user, ranging from loan worthiness to relevant data for an employer, The Wall Street Journal reported.

To build up the system, the Chinese government is partnering with eight eCommerce companies, including Alibaba-owned Sesame Credit Management, Ant Financial and Tencent Credit Bureau Co.

While the supporting private companies declined WSJ's request for a comment on the Chinese government's plan for the usage of the personal credit score derived from its social credit project, a spokesperson from Sesame Credit said, "Sesame Credit is the first credit agency in China to use a scoring system based on online and offline data to generate individual credit scores for consumers and small business owners. It tracks financial and consumption activities of our users for generating the score.”

The partnership with major social media and eCommerce companies across China essentially means the scoring system will provide a fuller profile with details derived from data from a person's digital footprint. This makes the score much different from the credit score offered in the U.S. that solely relies on factors pertaining to a person's credit and payment history.

Even though the Chinese government is still considering the possible use cases of its massive social experiment, the program is inviting an outcry from Chinese watchdogs who fear that the system will develop into something proportionate to the American government-led surveillance of its citizens.

“Certainly, the hope of the Communist Party is that the system of social controls with which they’re most comfortable can be brought into the modern economy with only a few compromises for economic scale and growth,” Anne Stevenson-Yang, director of research at J Capital Research, told WSJ.

“The dangers of surveillance and police control are the same everywhere. Governments try to do that everywhere. But some systems have balancing powers, and obviously, [the U.S.] has a lot more and a lot more tools for individuals to use," she added.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.