On June 23, reports surfaced that Ant Group is negotiating a deal with Chinese state-owned enterprises to create a new credit scoring company. The company would be fueled by the financial data Ant continues to collect on the more than 1 billion users of its Alipay app. The deal is not yet final; reporting suggests that negotiations currently center on who would manage the new company: Chinese regulators or Ant directors.
Ant Group also runs a private social credit company, Sesame Credit, which was one of a few companies authorized to run trial financial credit scoring services in 2015. (Sesame Credit paused its scoring in the spring of 2020, as the coronavirus took hold in China.)
Since the debut of the social credit system, China has expanded it to encompass social as well as financial deeds. Unlawful or even socially undesirable actions (like not paying off debt, or getting in a fight with a neighbor) earn citizens a place on a blacklist of “untrustworthy persons.” The list is designed to be “coercive, rather than punitive,” per China scholar Jeremy Daum, as people can work or comply their way off it.
Under the new proposal, the People’s Bank of China would allow Ant to develop a new credit scoring system. At least one commentator worries that this arrangement will deter other entities with consumer data, like Tencent, from sharing data with Ant. The question of public or private control over the data as well as the analytic tools used to create the scores may also complicate the venture’s future.
Chinese consumer debt has spiked recently. Rhodium Group analysis shows an expansion in household debt in China over the past five years that exceeds the debt racked up by American households from 2003 to 2008.
G-7, NATO Issue Statements Against China
In recent weeks, both NATO and the Group of Seven issued statements raising alarms about China’s economic, foreign and domestic policies. President Biden met with leaders of the other G-7 nations—Canada, the United Kingdom, Germany, Italy, France and Japan—in Cornwall from June 11 to 13. On June 13, the G-7 issued a communique covering a host of international issues, including trade, climate change and gender equality. Although China was mentioned explicitly only a few times, most commentators interpreted other parts of the statement as oblique references to China.
The G-7 communique explicitly criticized China’s “non-market policies and practices” and its human rights record in Xinjiang and Hong Kong. But elsewhere, the statement calls for an “open, interoperable, reliable and secure internet” and “values-driven” infrastructure development that is “transparent and financially, environmentally, and socially sustainable.” The calls for openness and interoperability are likely a critique of China’s internet censorship practices and its “Great Firewall,” while the calls for reliability and security seem to be referencing Western concerns over supply chain vulnerabilities and Chinese information technology suppliers. Meanwhile, the comments on infrastructure development seem to reference China’s Belt and Road Initiative, which has been criticized for its lack of transparency and sustainability. The G-7 announced a rival initiative, “Build Back Better World,” which aims to “beat back [the Belt and Road Initiative] by offering a higher-quality choice.”
Biden then attended a one-day NATO summit in Brussels on June 14. NATO, an alliance of 30 Western countries traditionally focused on countering Russia, issued an explicit warning about China for the first time. The statement highlighted several technological aspects of the threat posed by China, including cyber threats, disinformation campaigns, and emerging and disruptive technologies. Although the communique called China a “security threat,” some NATO leaders were more cautious. In a press conference, British Prime Minister Boris Johnson warned against descending…