A look at China’s social credit system

In a recent newsletter, we noted a spate of reporting drawing attention to the authoritarianism of China’s growing Social Credit System. This week, we are sharing a paper by YU-JIE CHEN, CHING-FU LIN, AND HAN-WEI LIU that casts light on the details of the program’s workings, corrects common misconceptions, proposes some likely and disturbing future scenarios, and offers a useful frame for understanding the significant shift it is bringing about in Chinese governance.

“A new mode of governance is emerging with the rise of China’s ‘Social Credit System’ (shehui xinyong zhidu) or SCS. The SCS is an unusual, comprehensive governance regime designed to tackle challenges that are commonly seen as a result of China’s ‘trustless’ society that has featured official corruption, business scandals and other fraudulent activities. The operation of the SCS relies on a number of important and distinctive features—information gathering, information sharing, labeling, and credit sanctions—which together constitute four essential elements of the system.

In our view, the regime of the SCS reflects what we call the ‘rule of trust,’ which has significant implications for the legal system and social control in China. We define the ‘rule of trust’ as a governance mode that imposes arbitrary restrictions—loosely defined and broadly interpreted trust-related rules—to condition, shape, and compel the behavior of the governed subjects… The ‘rule of trust’ is in fact undermining ‘rule of law.’

In the context of governance, the unbounded notion of ‘trust’ and the unrestrained development of technology are a dangerous combination.”

Link to the paper.

  • Jeremy Daum at China Law Translate responds to international coverage of the SCS and provides useful synthesis of the programs actually existing threads: “WIRED magazine recently described China’s ‘social credit’ plan as a social ranking system creating ‘three digits that dictate your place in society’. Others have compared it to an episode of Black Mirror where citizens constantly rate each other to devastating effect. None of these descriptions hits the mark, and the reality may be much worse.” Link.
  • Also at China Law Translate, the published text of the government’s plan for the SCS through to 2020. Link. (For much more from CLT on SCS, click through to this collected list of posts and translated documents.)
  • Tangentially related, a JW Mason post from December on a speech by Claudio Borio, which contains this analogy: “Think about that—a number assigned to every person, adjusted based on somebody’s judgement of your pro-social or anti-social behavior. If your number is too low, you aren’t allowed to fly on a plane. If it’s really low, you can’t even get on a bus. Could you imagine a system like that in the US? Except, of course, that we have exactly this system already. The number is called a bank account.” Link. Robert Hockett makes and expands on similar points in his column on the SCS for Forbes. Link.


Migration as anticipatory response to climate shocks

In an important new job market paper, economist ESTEBAN QUIÑONES examines the relationship between the observed effects of climate shocks and migration patterns. Using socioeconomic panel data from across rural Mexico and weather data, Quiñones assesses whether people adjust their labor and location in response to heat-induced crop losses in nearby households.

“I find evidence of domestic migration in anticipation of crop shocks, particularly among females and households with lower land-labor ratios. I also show evidence of local labor reallocation onto household land (agricultural self-employment), especially among males and households with higher land-labor ratios. This study highlights the substantial influence of the environment-agriculture mechanism, the salience of anticipatory adaptation, and the relevance of learning from others in the context of climate risk.”

Link to the paper. In a blog post, Quiñones explains his research and situates it within the climate migration literature:

“This study makes three contributions: Individuals mitigate against the increased probability of destabilizing climate events in an anticipatory manner through domestic migration; Adaptation to climate change can take place via a learning from others; The appearance of adaptation gaps to climate change may be explained by a nearly exclusive focus on the ex post.”

Link to the post.

In this new section of the JFI Letter, we will be highlighting great work from a graduate student each week. Have you read any excellent student work recently that you’d like to see shared here? Send it our way:


  • From Thomas Hale in the Financial Times, an analysis of income share agreements with a focus on how philanthropic capital can play a part in building the market. JFI and our partners, Better Future Forward, are both in the story. “If philanthropic or charitable foundations take a ‘first loss’ stake, they can conceivably bridge the risk-reward gap between private capital and social goals, in a manner comparable to what the government might otherwise do (and does all the time, all over the place).” Link.
  • A huge new universal basic income study in Sikkim, India. “Sikkim’s ruling party has announced an ambitious plan to implement a universal basic income for every one of its 610,577 citizens. If successful, the scheme would represent the largest trial run anywhere in the world. Link to coverage in the Washington Post by Niha Masih.
  • From late December, Adam Tooze writes on the implications of climate change for “sovereign permanence”—particularly in island nations: “The assumption that nations have infinite time horizons is the foundation of all ideas of a stable and lasting international community… The world must decide how to treat sovereign states when their time horizon becomes limited. What kind of investment can be justified in a state whose life span is numbered in decades?” Link.
  • The Affordable Drug Manufacturing act, covered in Politico by Alex Thompson and Sarah Karlin-Smith, “would establish an Office of Drug Manufacturing that would be required to manufacture at least 15 different generic drugs in its first year where the agency determines there is a failure in the market.” Link.
  • Scott Jaschik at Inside Higher Ed covers a new report on community college students transferring to four-year institutions. Link. And link to the original study, from the Jack Kent Cooke Foundation.
  • Do online offerings increase access to education? Joshua Goodman, Julia Melkers, and Amanda Pallais answer this question using Georgia Tech’s groundbreaking online MS in Computer Science as a case study with encouraging results. Link.
  • Matthew Nisbet on the philanthropic politics of funding the decarbonization push. Link. Also on climate, the economics establishment is again backing a carbon tax. Link.
  • A paper by Hoda Heidari, Claudio Ferrari, Krishna P. Gummadi, and Andreas Krause looks at fairness in ML from behind Rawls’ veil of ignorance. Link.
  • Economic history from Mikio Ito et al: “This article studies the interrelation between spot and futures prices in the two major rice markets in prewar Japan from the perspective of market efficiency.” Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations:

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