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China credit rating systems raise Big Brother fears

China credit rating systems raise Big Brother fearsChinese internet companies are battling it out to create credit ratings based not just on citizens’ finances but also their social networks, raising fears that Big Brother could take up residence in consumers’ wallets.

Sesame Credit and other credit rating systems are responding to a glaring need for a credit rating database in a country that has seen rapid growth in personal credit cards, mortgages and online payments systems. About a third of Chinese own credit cards, up from 15 per cent five years ago.

Pilot programmes have drawn on users’ social networks, purchasing behaviour and even dedication to jogging as proxies for creditworthiness, spurring American Civil Liberties Union policy analyst Jay Stanley to call the programme “nightmarish” and warn against its adoption in the US.

However, in China, where civil rights lawyers are jailed, online postings censored and popular social networking aps such as WeChat monitored for politically sensitive content, citizens seem to have no such concerns. Rather they have turned to the internet in droves to brag about their high scores.

“No one on earth can stop me now!” exulted Rongrong, an e-commerce seller from Hangzhou who regularly posts her credit scores online. Sesame Credit rated her 813 out of a possible score of 950, or “credit extremely good”.

Early this year China’s central bank authorised eight companies to pilot credit ratings systems, setting the goal of creating a national system by 2020. The rival commercial ratings systems starting up now could set a precedent for how the national system functions.

“It’s clear from the text that Chinese authorities don’t want a credit system that’s completely focused on finances; rather they paint the new system as a way of rewarding “sincerity” (and punishing insincerity) throughout society,” wrote Charlie Custer on tech blog Tech in Asia. Nonetheless he said he had found no evidence for the ACLU’s assertion that a person’s political posts, or their friends’ political activity, was used in assessing credit scores.

Among the rival systems are Sesame Credit, which rates users partly on their purchases through Alibaba’s online payment system Alipay, and China Rapid Finance, which draws on big data scraped from Tencent, the Chinese internet and gaming company.

If the Chinese system of social credit does get traction overseas, couch potatoes may be among the first victims. A credit rating system trialled by the financial services arm of smartphone maker Xiaomi culls data from a biometric wristband. People who take up jogging and stick with it are likely to be creditworthy, it concludes, whereas those who exercise for a day or two and then stop again might be equally unreliable with their bills.

Source: Financial Times
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