Behavioral control via the means of payment – ​​BitcoinBlog.de – the blog for Bitcoin and other virtual currencies

China is ramping up its CBDC, the digital yuan, linking payments to social credit score blacklists. The information on this is a little fuzzy, but from a bird’s eye view it gives a shockingly clear picture.

China, probably the best organized dictatorship on earth, is currently introducing a digital currency, the e-CNY, and is increasingly controlling the population through a social credit score that rewards or punishes desirable and undesirable behavior.

It seems as if the two systems are now committing a dystopian union. Songpinganq wrote on Twitter, “It’s happening.” Once you’re blacklisted by the social credit system, “you can no longer use China’s CBDC wallet Alipay or Wechat Pay. This means you can’t buy food, pay for hotel rooms, book plane or train tickets… and can’t shop online.”

It’s happening in China now.

Once you are blacklisted by social credit system, you can no longer use China’s CBDC digital wallet-Alipay or Wechat pay.

Which means you can’t order food, book hotel room, buy train/plane tickets…etc online. https://t.co/kxf5O2vKpI pic.twitter.com/n8HGR9YkUm

— Songpinganq (@songpinganq) May 30, 2023

It’s incredibly convenient to pay by waving your hand – WeChat Pay allows this by reading your palm print – but “as soon as you’re blacklisted, the system will instantly freeze your digital wallet – you can’t use ‘Uber Eat or.’ “Order more rides.”

It’s creepy convenient to pay with a wave of your hand in China now, untill you are 𝘽𝙡𝙖𝙘𝙠𝙡𝙞𝙨𝙩𝙚𝙙 by Social Credit System.

Once you are 𝘽𝙡𝙖𝙘𝙠𝙡𝙞𝙨𝙩𝙚𝙙, the system will immediately freeze your Digital Wallet (bank account) —— you can’t order ‘Uber Eat or Ride’. https://t.co/6tTcKplSfX pic.twitter.com/eFV5DYCdcT

— Songpinganq (@songpinganq) May 30, 2023

China, Songpinqanq warns as early as October 2023, is “integrating digital central bank money into its social credit system.” To buy ice cream from public freezers, you need a score of at least 550, which is already being implemented by the digital wallets from Alipay and WeChat. You need 600 points for luxury hotels, 500 to charge your electric car, 550 to shop in self-service supermarkets.

China is integrating Central Bank Digital Currency into its Social Credit System.

To buy ice cream from China’s freezers, you’ll now need a minimum Social Credit Score of 550. Thanks to Alipay and WeChat, two Chinese digital wallets, for making it happen! pic.twitter.com/GiAQxy3tCm

— Songpinganq (@songpinganq) October 18, 2023

Cash is still allowed, but “it is painful to use cash in a cashless society.”

It sounds dystopian: China’s Social Credit Score, driven by an infrastructure of surveillance cameras, AI algorithms and data mining (e.g. in social networks), flows together with the means of payment, the CBDC CNY-e, the digital yuan, and so it sets Payment systems continually discriminate, depriving you of the right to travel by train or shop online if you share the wrong link.

Creepy? Quite! But true? This is difficult to determine.

Fake News

Just a few days ago, several magazines reported that misinformation was circulating about China’s social credit system. A screenshot of a video shows how a woman is no longer able to pay for her electric car with a CBDC because her social credit score is below 550.

The Australian Associated Press (AAP) explains that experts say China has no social credit system at all for citizens. The woman does not pay with a CBDC, but with the WeChat app from the tech company Tencent. The image only concerns the practice of a payment service provider and has nothing to do with social credits or CBDC. The number 550 on the display, however, represents the “WeChat Pay Score”, a system “which activates the ‘Pay Later’ option as a reward.” Anyone whose score is too low has to pay immediately instead of on credit.

Other media also explain this error as similar rumors, for example that purchasing ice cream from ice cream machines is linked to social credits. In all cases, it’s just an internal score for a payment app. There are apparently quite a few TikTok videos that claim harassment through social credits where it doesn’t exist.

So is it all just fake news?

Untangling terms

In fact, one should first look for conceptual clarity. The e-CNY is China’s program for a digital central bank-issued yuan. The project has been running for a few years now, there are occasional reports about it, and pilot tests here and there, but overall it is penetrating the economy much more slowly than expected. Hardly anything shows this better than a report from the South China Morning Post from March 2024.

The newspaper reports on a customer advisor at a bank who receives her income as e-CNY in a special app. She is “among the first group of employees to be paid entirely in digital yuan.” Since she doesn’t get any interest in the app and therefore can hardly pay anywhere, she transfers the CNY to her bank account almost immediately. It doesn’t sound like the e-CNY dominates payment transactions.

This has a reassuring similarity to DE-Mail and other government projects. The Chinese Communist Party is also having difficulty getting its app to the public.

Desirable and undesirable behavior

Things are more complicated with the social credit score. There is and somehow isn’t, and the reports on it vary widely. The dystopian system of “total control of the population” that it is often portrayed as in the West, including on Wikipedia? Or just a paper tiger, hardly more invasive than our Schufa score?

The system goes back to plans from the late 20th century, has been developed since 2014 and has been gradually introduced since 2017. It is now active in around two thirds of all cities.

Both individuals and companies receive a score that lies between 1 and 1000. What exactly influences the score depends from region to region. It can be enough to visit your parents too rarely, cheat in computer games, leave your dog’s poop, and so on. There is no uniform social credit system; what is desirable and what is undesirable behavior depends on the location.

Individuals whose score drops too low must expect sanctions. Already in 2019, 23 million people were apparently deprived of their right to travel by train or plane because their score was too low. Bans from certain universities, employment bans in the public sector and more are also up for debate. Such bans are enforced through blacklists, some of which exist in parallel, and which are accessed by companies and payment service providers.

If you want to know how high your score is, you have to ask the central bank, the People’s Bank of China. This keeps the score, which probably simplifies its integration into the payment system.

Divergent reports

It sounds different if you ask around on the Reddit discussion platform. In a thread five months ago someone asked about the status of the Social Credit Score. The most common answer is that it barely exists.

The system was proposed, says one, “but it was shot down pretty quickly, so no one talks about it anymore.” Someone else disagrees, “It’s 100 percent operational, to the point where you have to scan your face to to get public toilet paper.”

Another calls it “a comic book version of the Western idea of ​​an evil, dystopian, authoritarian system. In reality, the Communist Party doesn’t need anything like that to control people.”

The party has long had all the means to control people. She doesn’t need a method as sublime as the Social Credit Score.

Blacklists for debtors

Opinions obviously differ. What doesn’t make things any clearer is that social credits are sometimes confused with blacklists of defaulting creditors.

An article in the Wall Street Journal from April provides a vivid account of what can happen to you in China if you are unable to repay your debts: for example, you cannot book high-speed train tickets, flights, or good hotel rooms, in some cases you are also excluded from government jobs.

The fact that China hardly has any procedures for personal insolvency makes the harassment even worse. Anyone who finds themselves in a debt trap can no longer get out easily and is now being harassed via blacklists and payment apps such as WeChat and AliPay.

From a bird’s eye view

So, overall, it’s confusing. There is a CBDC that is rarely used, a social credit system about which conflicting information is circulating, and debtor blacklists that are not the same as the social credit system but closely resemble it.

However, if you look beyond these specific confusions, the picture becomes clearer: the omnipresent payment service providers in China have become organs of social control. They punish people who behave in an undesirable way – be it in the sense of social credits or as unreliable debtors – by blocking certain payment methods or expenses.

A CBDC, i.e. a digital currency from a central bank, is only marginally involved. But it’s not necessary either. Because the centralization of payment systems on a few digital apps already enables everything that a CBDC can do.

It would probably be best if everyone agreed that CBDC is not a term for a specific type of digital money – but rather a term for the risks to freedom that the digitalization of money can bring. And against which, one hopes, cryptocurrencies can protect.