China’s social credit system won’t tell you what you can do right

For the past few years, China has been rolling out a Black
Mirror
 
Harry
Potter
-esque social rating policy known as the Social Credit
System (SCS). Far from just a credit score in the financial sense,
an SCS score can determine whether a person can buy
business class tickets on trains
(or take the train at all) or
have access to flights.
Apps are rumored to exist
that would tell users whether they
are standing near someone with a debt listed in the system, so …
they can walk away I guess.

This is a massive undertaking, and researchers are finally
starting to collect good data on the system’s operation, such as
a MERICS report looking at

the implementation of this complex system
, which involves
companies and all levels of the Chinese government. Westerners have
also
increasingly explored the generally positive reception of the
system by Chinese citizens
, which would seem at odds with
typical desires for privacy.

Yet, one of the biggest and most obvious open questions is what
exactly will get you rewarded or punished by the SCS? Now, we are
finally starting to get answers.


In a new paper that will be presented this week
at the ACM FAT* Conference on algorithmic
transparency, a group of researchers investigated how positive and
negative points were assessed by downloading a large corpus of
hundreds of thousands of entries from the Beijing SCS website and
analyzing it with content analysis machine learning tools.

They found that Beijing was remarkably clear about what will get
you punished, but vague about what will get you positive points.
For instance, the vast majority of the blacklist was made up by
people who had failed to pay their debts, or who had committed a
traffic violation. Meanwhile, the people on the redlist (the
positive list) were there because they were, say, great volunteers,
but with no criteria on how to get that status or why they were
listed at all.

“It’s very difficult to pinpoint the exact degree of
transparency,” of SCS said Severin Engelmann, one of the lead
researchers based at the Technical University of Munich. Far from
being just an experimental startup, SCS is already quite advanced.
“Blacklisting and redlisting are already in place, and they
clearly indicate what behavior is bad … but not what behavior is
actually good,” he said.

Even more interesting, there are more companies on the blacklist
and redlist than there are individuals within the Beijing corpus,
indicating that while the government is certainly concerned about
citizens, it’s bringing its social control mechanism onto
companies perhaps more aggressively.

Jens Grossklags, another of the researchers, noted that this
level of transparency — while inconsistent — was unusual in the
West. “It is really fascinating from a data science perspective
to see how much information is being made available not just to
individuals but to the general public,” he said. He noted that

public shaming has been common with the Chinese system
, while
Western consumers have a hard time accessing their own scores let
alone the scores of others.

The study is one of the first to look at the actual
implementation of SCS and reverse engineer its algorithm, and the
researchers are potentially following up by investigating regional
variations and further changes to the system.

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the author (Danny at danny@techcrunch.com) if you like
or hate something here.

Share your feedback on your startup’s attorney

My colleague Eric Eldon and I are reaching out to startup
founders and execs about their experiences with their attorneys.
Our goal is to identify the leading lights of the industry and help
spark discussions around best practices. If you have an attorney
you thought did a fantastic job for your startup,
let us know using this short Google Forms survey
and also
spread the word. We will share the results and more in the coming
weeks.

Stray Thoughts (aka, what I am reading)

Short summaries and analysis of important news
stories

Hustling to nothing

Erin Griffith has a great piece
on the increasing pervasiveness of hustle culture
. This is part
of a long-running debate in Silicon Valley between the
work-your-ass-off crowd and the productivity-peaks-at-35-hours
crowd. The answer in my mind is that we should see work in phases
— running at 100 MPH all the time is most definitely not
sustainable, but neither frankly is working a very stable number of
hours per week. The vagaries of life and work mean that we need to
surge and recede our efforts as dictated, and always track our own
health.

Nvidia’s troubles continue

We’ve talked a lot about Nvidia over the past few months
(Part
1
, Part
2
,
Part 3
). Well, the bad news train just continues.
As my colleague Romain Dillet reports
, Nvidia is cutting its
revenue outlook, and now the stock is falling again (another 14% as
I write this). It cites lowered demand particularly from China,

which is experiencing a major slowdown in its economy
.

Can Chinese startups subsidize customers forever?


The Financial Times asks an important question
about the
“China model” of startups: should founders heavily subsidize
customers in order to buy market share and fight competitors? They
point to bike sharing startup
Ofo’s collapse
, although I would point to
the expensive rise of Luckin Coffee as perhaps the latest
example
.
It’s a lesson that Munchery’s investors also have had to
learn
: at the end of the day, those unit economics better turn
positive if a company is to survive.

What’s next

  • More work on societal resilience

This newsletter is written with the assistance of Arman
Tabatabai from New York

Source: FS – All Tech News 2
China’s social credit system won’t tell you what you can do right