Zhima Credit: How Would You Rank?

Building the first Social Credit Scoring System: Zhima Credit

The giant Chinese equivalent of Amazon is leading the race to derive an automated rating algorithm for all citizens of China. Their affiliate company, Ant Financial, have created a service known as Zhima Credit (Or Sesame Credit). They realised that the data-collecting powers of their leading app, Alipay, could be used to calculate a very detailed score based on an individual’s activities. Some people are hailing it as the hellish predictions of black mirror becoming a reality but should we really be worried about it?

Have you checked your credit score recently? For some, the thought of having themselves measured by some faceless institution is a source of serious stress. Love it or hate it, this measure has become the most important indicator by which financial institutions and service industries choose to evaluate the risk in taking on customers. For those with a bad score, they often object to how ‘chicken and egg’ their situation is, unable to improve their score without having a decent one in the first place. The next time you see such a person you may be able to comfort them by explaining that approximately 500 million working people in China are supposedly in the same boat. According to the Chinese Ministry of Commerce, the annual economic loss caused by lack of credit information is more than 600 billion yuan (£68bn). The central bank has the financial data from 800 million people, but only 320 million have a traditional credit history. To tackle this, the Chinese government has reached out to the world of technology.

They are one of eight tech companies that have been granted approval from the People’s Bank of China to develop their own private credit scoring platforms. Each was encouraged to develop and test their processes to demonstrate their reliability on a grand scale before 2020 when one might be selected to be the country’s official social credit scoring system. Zhima Credit, hidden within the myriad of services that are presented by Ant Financial within their flagship app AliPay seems to be the horse winning this particular race so far.

The Zhima Credit Scores range between 350 and 950 and are built from 5 factors:

  • Credit History
    • Where possible, the traditional credit scoring method is used
    • Does the citizen pay their electricity or phone bill on time?
    • Have they defaulted on a loan?
  • Fulfilment capacity
    • Defined as “a user’s ability to fulfill their contract obligations”. This has been a key selling point for businesses to use this metric to rate their potential customers
  • Personal Characteristics
    • Is the citizen’s mobile phone number verified?
    • Is the citizen registered at the address they claim to be at?
  • Behaviour and Preference
    • Shopping habits using services like Alibaba can paint a remarkable picture
    • Online behaviour including streaming media and gaming
  • Interpersonal Relationships
    • Perhaps the most controversial of them all
    • Your interactions, posts and the behaviours/scores of your friends can indirectly affect your score!

The subtle cleverness of this soft Zhima Credit launch should not be understated, as users have been scrambling to willingly sign up for the current service while there seems to be no substantial drawbacks. It has been described by many as basically a loyalty scheme for an entire country, sponsored by certain companies:

  • 600+ points – take out a Just Spend loan of up to 5,000 yuan (around £565) to use to shop online, as long as it’s on an Alibaba site
  • 650+ points – rent a car without leaving a deposit. You are also entitled to faster check-in at hotels and use of the VIP check-in at Beijing Capital International Airport
  • 666+ points – get a cash loan of up to 50,000 yuan (£5,700),obviously from Ant Financial Services
  • 700+ points – you can apply for Singapore travel without supporting documents such as an employee letter
  • 750+ points – you can get fast-tracked application to a coveted pan-European Schengen visa

Sounds great, right? Some of these perks just for being a good citizen? It is likely that there may be more reasons for the Chinese readily accepting this new concept of Zhima Credit than a reward mentality.

Recent advertising campaigns and public accounts reinforce the idea that a big motivation for wanting these scores is rooted in fear. In China, anxiety about pianzi, or swindlers, runs deep. ‘How do I know you’re not a pianzi?’ is a question people often ask when salespeople call on the phone or repairmen show up at the door. Doing business in China is seen as risky purely because so many people and businesses do not adhere to the contracts they sign. With the light now being shined on their trustworthy status, the stakes just went up for reneging on a contract

As you might imagine, there are some individuals who are loving their new status symbol. Weibo (the Chinese version of Twitter) is already filled with people bragging about their scores. Then again, who in China would publicly do anything but praise a system that rates you based on the sentiment of your posts?

In this incubation period, while Chinese citizens get used to the idea of being rated in such a way, it appears that Ant Financial’s aim is to paint a picture of this process being fun and harmless. In a recent statement, a spokesperson stated, “Zhima Credit does not share user scores or underlying data with any third party including the government without the user’s prior consent.” But in an advertisement for the same service, AliPay uses the tag line, “Zhima Credit will ensure that the bad people in society don’t have a place to go.”

The gamification of presenting yourself as trustworthy to the world could have extreme consequences. For example, Alibaba’s recommendation algorithm has been tweaked to recommend items that would make your score increase. Nappies and similar items that suggest that you are a family and therefore have more responsibility are seen as positive score drivers. It isn’t long before this all becomes a lot more serious for citizens of China.

In 2020 the government is expected to make some version of these scores a legal requirement. On September 25, 2016, the State Council General Office updated its policy entitled Warning and Punishment Mechanisms for Persons Subject to Enforcement for Trust-Breaking. The overriding principle is that the policy document states is simple: “If trust is broken in one place, restrictions are imposed everywhere”. The section describing “restrictive control on consumption within holiday areas or travel businesses” is said to effect access to restaurants, nightclubs, and international travel. Scores will influence a person’s home rental applications, their ability to get insurance or a loan and even social-security benefits. Citizens with low scores will not be hired by certain employers and will be forbidden from obtaining some jobs, including in the civil service, journalism and legal fields, where of course you must be deemed trustworthy. Low-rating citizens will also be restricted when it comes to enrolling themselves or their children in high-paying private schools. This impending net of possible punishments really seems to be designed to kick someone while they are down.

Was this always inevitable? We have seen great advancements in the convenience of technology that we have access to as consumers. Most of the most successful of these have been offered by large firms whose interest includes harvesting the data generated by us using their service. In The Inevitable Kevin Kelly describes a future where the watchers and the watched will transparently track each other. We already live in a world where data is stored about us and our behaviour every day, these are churned through predictive algorithms that determine if we are a threat, a risk, a good citizen, and even if we are trustworthy to insurers, banks and other service providers. The amount of surveillance possible through just the AliPayapp in China is however staggering:

  • Order breakfast through a food delivery app
  • Pay for parking through Alipay’s My Car App
  • Book a doctor’s appointment and beat the queues
  • Add friends using the social network features
  • Pay for goods and services on holiday
  • Pay for gas/electric/internet bills

Can one avoid this having an effect on them? Perhaps the best course of action is to understand the system to use it to your advantage. The full algorithm is unlikely to be public knowledge as people would try and manipulate their scores. We may find that the people who are in charge of designing the algorithm will have amazing scores!

You could argue that “socially acceptable behaviour”, when it is defined by the Chinese government, and not a democratic process or an objective panel, is a contradiction. The idea that punitive measures will certainly be taken when a person breaks this trust is terrifying. These systems are inevitably basic and rate someone using only a few data points. This will often paint a very inaccurate and incomplete picture of a person. We, humans, are inconsistent, our morals are contradictive and an algorithm has never achieved the nuances of right and wrong.

by Andrew Sargood

Posted on February 20, 2018