Professor Doris Fischer, Chair of China Business and Economics at the University of Würzburg, is one of the project leaders in the bidt project “Learning from the ‘Pioneer’? A multidisciplinary analysis of the Chinese social credit system and its impact on Germany”.
China’s social credit system contains elements that are compared to Schufa. What parallels are there and where does the comparison end?
The original idea of the social credit system was that in order to create trust in economic relations, you have to be able to check people’s creditworthiness and you need data for that. The logic behind this is the same as with Schufa, for example. If you rent a flat or want a house loan, you are also required to submit a Schufa report.
But while Schufa is a private company, in China the state collects the data and makes the information public. The associated “public shaming and blaming” was not invented with the social credit system. It is culturally embedded in China that good behaviour is publicly rewarded and highlighted.
The social credit system has only been established since 2014, how did it work until then?
Trust in China is traditionally built through relationships. Life takes place between people with whom you have a relationship. People tend to be indifferent towards strangers. The basic trust in one’s neighbour, as we know it in Western societies, and our legal tradition, which provides security, do not exist in China.
With globalisation and international competition, the Chinese government was therefore faced with the dilemma: how to secure this trust in a complex market economy?
For them, the social credit system, apart from its Schufa function, also has the attraction that the individual can be educated through it. Anyone who violates rules ends up on a so-called blacklist, which is publicly visible, and is considered untrustworthy.
Anyone who breaks the rules ends up on a so-called blacklist, which is publicly accessible, and is considered untrustworthy.
Prof. Dr. Doris Fischer
How can you imagine the social credit system in concrete terms?
It is all still under construction. You should not think of it as a uniform system that collects the data of all Chinese throughout the country and makes it transparent. There are no uniform scores for everyone yet. I don’t think it’s likely that there ever will be. There are many individual, mainly local systems. But you can already see whether a company is on a black or red list.
A major difference to an institution like Schufa here is that there are agreements between the authorities to communicate with each other about this, and this is used for sanctions, on an individual level, but also for companies.
This leads to the fact that companies also pay attention to the behaviour of their employees and, conversely, the rating of a company also affects the rating of the owner.
At the moment, social credit does not play a big role for many people, but there are already occupational groups or situations when you need a loan or want to travel abroad where it can become important for the individual.
Most recently, Schufa has attempted to take a look at the account transactions of private individuals in order to check their creditworthiness. This goes far beyond what we know about the Chinese system.
Prof. Dr. Doris Fischer
The title of your bidt project contains the phrase “Learning from the ‘pioneer'”. What can be learned from the social credit system?
China is establishing a new regulatory model with the social credit system. When the government realises that it works, it will try to spread it internationally. Then, at the international level, will finances no longer be reviewed only by the World Bank, but also on the basis of the social credit system?
You have to understand what China is doing with the social credit system to be able to assess what it means if this should diffuse into international practice.
And related to Schufa: In Germany, there are discussions about whether Schufa should make more transparent how it arrives at its ratings, for example by publishing its algorithms. Most recently, Schufa has started to take a look at the account movements of private individuals in order to check their creditworthiness. This goes much further than what we know about the Chinese system.
In Germany, the fear that the state might have too much personal data is much greater than in China. We disclose them to companies in return.
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