Ever since the Chinese leadership announced the so-called Social Credit System ten years ago, there has been repeated talk of China’s path towards an IT dictatorship and a total surveillance state. A lot has happened and been implemented since then. However, the truth is that there are many different models and there still is no overarching control of every individual, at least not yet.
And the debate about the various models is also more critical in China than many in the West think. In an interview with Julia Fiedler, Marianne von Blomberg, an expert in Chinese law, even sees parts of the Social Credit System as a kind of pioneering model – and believes that this control system is not entirely unthinkable for Europe either.
Business is becoming increasingly difficult for Mercedes. Not only is the Stuttgart-based company, like all German car brands, struggling with dramatic sales declines in China. Now its decades-long joint venture partner BAIC is also cooperating with the tech company Huawei and has launched an impressive luxury EV – rivaling Mercedes.
Joern Petring analyzes why it has become so vital for the Chinese Mercedes partner to no longer rely solely on cooperation with Germans, but to forge new alliances.
Mercedes is getting new competition in the Chinese luxury market – from a long-standing partner. The Chinese state-owned company BAIC, which has been manufacturing vehicles for the Chinese market in collaboration with Mercedes for around 20 years, has also joined forces with Huawei. BAIC and Huawei jointly launched sales of the Stelato S9 last week – a new premium EV with numerous high-tech functions.
Thanks to several such partnerships with Chinese car manufacturers, Huawei has become an integral part of automotive development in China in recent years. These partnerships always follow a similar pattern. Huawei acts as a technology supplier, while the car manufacturers produce the cars. Huawei then utilizes its strengths in marketing the cars. These cars can be tested and purchased in Huawei shops as easily as smartphones.
This model has already been successfully implemented with the manufacturer Seres, with whom Huawei works under the Aito brand. Models such as the Aito M5, M7 and the luxury SUV M9 all use Huawei’s software and hardware. The Shenzhen-based company is building the Luxeed S7 in partnership with the manufacturer Chery.
According to the Chinese business magazine Caixin, sales under these partnerships amounted to 194,000 units in the first half of this year. The majority of sales came from the Aito brand.
Huawei is also pursuing ambitious plans with the Stelato S9. Two differently configured versions are available, priced at 449,800 yuan (58,000 euros) and 399,800 yuan. As befits a Chinese premium EV, the Stelato comes with luxurious leather seats, massage functions and large displays.
It also features the latest version of Huawei’s self-driving software. However, in September, the Advanced Driving System (ADS) 3.0 will also be rolled out for existing Aito and Luxeed models. One feature that is being particularly advertised on social media is the rear seat, which can be transformed into a home cinema by touching the display. It features a 32-inch projection screen that extends from the roof lining.
The cinema experience is further enhanced by the option of completely darkening the rear windows. The front passenger seat can be automatically folded down to create a comfortable reclining area for the passenger sitting behind them.
It is strategically sound for BAIC to maintain its partnership with Mercedes as well as enter into new alliances with technology companies such as Huawei to have any chance at all in the highly competitive Chinese EV market.
Mercedes must also expect business in China to remain difficult. In the second quarter, the Stuttgart-based company sold significantly fewer cars in China, its most important foreign market, leading to a noticeable profit drop. Sales in the People’s Republic fell by six percent year-on-year, and the net profit of the entire company fell by 15.9 percent to 3.06 billion euros, as the German manufacturer announced.
This is due to fierce competition in China, but the economic situation is also a factor. Even wealthy customers keep a closer eye on their money and prefer waiting before buying a new car.
China has recalled a senior official from Tibet to step up its efforts to clean up the financial sector. According to an article published by the anti-corruption authority CCDI in July, Wang Weidong has been appointed head of the Central Financial Discipline Inspection and Supervision Work Committee. The newly created committee reports to the CCDI.
The 56-year-old has extensive experience in the fight against corruption. His appointment as Party Secretary of the new authority underlines Beijing’s determination to bring the country’s financial sector under even tighter control. The government has been increasingly tough on the financial sector for several years.
Born in the province of Shanxi, Wang began his academic career at Dongbei University of Finance and Economics, where he graduated with a degree in accounting in 1991. He was immediately drawn to the civil service. His career initially took an unspectacular but steady course. He worked in administration for two decades and became deputy secretary general of the CCDI in 2016.
In the country’s top anti-corruption authority, he quickly gained a reputation as a staunch fighter against corruption. In May 2019, Wang was posted to Tibet to head the regional disciplinary commission. Having returned to the CCDI, Wang now faces what is probably his most important task.
China has tightened its grip on the 66 trillion dollar financial industry in recent years, branding bankers as “hedonistic” and emphasizing the Communist Party’s “centralized and unified leadership” over the sector.
The anti-corruption campaign launched in 2021 has shaken the industry, bringing down over 100 financial officials and executives last year. In the first six months of 2024, 32 more high-ranking financial regulators, bankers and financial managers were arrested. At the Third Plenum in July, the Communist Party also emphasized the need for improved supervision of the financial sector.
Supporters see the anti-corruption campaign as an important step towards cleansing the financial sector of unethical conduct. The measures are intended to lead to greater transparency and stability in the long term. However, critics argue that the tighter control by the Communist Party undermines the independence of the financial sector.
This development could further weaken the confidence of the international financial markets in China, as political considerations are increasingly superseding economic principles. The fact that some investment bankers have been asked to accept a salary cap of around three million yuan (approx. 380,000 euros) per year is also causing unrest in the industry. There have also been reports that high-ranking executives have had to return their sometimes generous bonus payments.
This watermelon may already be ripe. But it could be even bigger. At least, that’s the way the food developers see it, who are presenting their giant watermelon varieties at the 23rd Agricultural Expo in Changchun, southern China. And every year they present a melon that is even bigger and tastier. We are already looking forward to next year’s presentation.
Ever since the Chinese leadership announced the so-called Social Credit System ten years ago, there has been repeated talk of China’s path towards an IT dictatorship and a total surveillance state. A lot has happened and been implemented since then. However, the truth is that there are many different models and there still is no overarching control of every individual, at least not yet.
And the debate about the various models is also more critical in China than many in the West think. In an interview with Julia Fiedler, Marianne von Blomberg, an expert in Chinese law, even sees parts of the Social Credit System as a kind of pioneering model – and believes that this control system is not entirely unthinkable for Europe either.
Business is becoming increasingly difficult for Mercedes. Not only is the Stuttgart-based company, like all German car brands, struggling with dramatic sales declines in China. Now its decades-long joint venture partner BAIC is also cooperating with the tech company Huawei and has launched an impressive luxury EV – rivaling Mercedes.
Joern Petring analyzes why it has become so vital for the Chinese Mercedes partner to no longer rely solely on cooperation with Germans, but to forge new alliances.
Using the Social Credit System as an example, you analyzed how much criticism legal scholars in China can level at draft legislation. The system is surrounded by many myths. So the first question is: What is it and what isn’t?
There is not just one Social Credit Score that is managed by the central government and that every person and every company has. In fact, there are many pilot projects that fall under the umbrella of Social Credit, but they are all entirely different. Some of them have scores, others do not. Projects with scores usually work with rewards.
What do such projects look like?
For example, there are urban systems, such as in the city of Hangzhou. Citizens can earn points by separating their trash correctly or donating blood. These are voluntary programs. A good score allows citizens to use the fitness facilities at public schools or parks in the city center for a few hours for free. Incidentally, low scores in these projects do not result in any penalties. However, the focus of the Social Credit System – and this is an important point – is clearly on companies and organizations, not individuals. Of course, these are also addressees, but they make up a relatively small proportion. I would say maybe ten percent.
In Germany, information on someone’s creditworthiness can be obtained from Schufa, among others. Is that comparable?
As already mentioned, there are many projects, including financial or credit rating agencies, similar to Schufa. Pilot projects licensed by the central bank from Alibaba, Tencent and other large technology companies have now been restructured into two large personal credit rating agencies, Baihang Credit and Pudong Credit, which are majority-owned by the state. They are part of the broad government initiative ‘Social Credit System,’ which aims to improve the trustworthiness of Chinese citizens, companies, authorities and also the justice system. The groundwork was laid back in the late 1990s, and in 2014 the State Council confirmed the intention with its planning outline for the development of a Social Credit System. The concept of trustworthiness is essentially intended to become a guiding governance paradigm.
In what form and in what spaces do legal scholars voice their criticism?
The traditional channels are academic journals, publications and books. There are also frequent interviews and commentaries by legal scholars, for example, in newspapers or on WeChat accounts of think tanks, service providers and organizations active in the social credit sector. It should be noted that, contrary to what is often assumed, the expertise of legal scholars is very welcome in politics, at least as far as the Social Credit System project is concerned. The project is not a secret surveillance initiative, but a prestige project that should adhere firmly to the law. There is also state funding for projects researching how the Social Credit System project can be harmonized with the applicable law. Colleagues at law faculties in China are regularly invited to contribute their expertise. Of course, they do not have the last word and are always outnumbered by many senior officials from government agencies.
How do scientists know how far they can go with their criticism?
There is no clear red line. The notion of a red line is always somewhat linked to the idea that China has a single all-controlling and guiding leader. I think what we see in the public discourse already shows that it’s not that simple. What can be said when and what consequences it will have is often variable. There are many soft indicators that scientists know very well and use as a guideline. These change depending on the political situation. The Social Credit System is not a particularly sensitive topic and can be discussed relatively controversially.
Because the government has an honest interest in criticizing the system in order to improve it?
Precisely. It would be a problematic, convenient – and also arrogant – conclusion to say that the entire legal discourse in China is uncritical and useless simply because it is partially restricted. Even where Western-socialized eyes only see the repetition of political rhetoric, fascinating twists and details can often be discovered. Not to mention the fact that Chinese political rhetoric as a whole is not sufficiently deciphered and understood in Europe.
Of course, there are spaces where critical discourse takes place – and takes place very openly. To identify these, you must familiarize yourself and find out: What is accepted and what is not.
That is precisely what you have done. Why is it important from our perspective to recognize this and discover these spaces?
In general, we don’t know enough about how the law works in the Chinese party-state – especially internally. What are the mechanisms by which power is distributed, who can exert what influence and how is the legal system developing under the conditions of the data age? These questions only arise when you look closer: Perhaps it is not just Xi Jinping who sits at a lever and can see and direct everything.
Only then can we discover where there may even be parallels. Incidentally, many innovations in the development of the Social Credit System can be found in a very similar form in European authorities, under different names, of course. The ability to generate assessments from data sets to predict individuals’ trustworthiness is revolutionizing administration, and the risks here are also clear: For example, the resignation of Dutch Prime Minister Rutte after an AI used by the tax authorities mistakenly accused thousands of families of fraud. In this respect, parts of the Social Credit system can be seen as a kind of pioneering model instead of being written off as an authoritarian control instrument that would be unthinkable in Europe.
Marianne von Blomberg is working on her doctorate at the University of Cologne and Zhejiang University. In collaboration with Bjoern Ahl, she recently published the study “Debating the Legality of Social Credit Measures in China – A Review of Chinese Legal Scholarship.”
Mercedes is getting new competition in the Chinese luxury market – from a long-standing partner. The Chinese state-owned company BAIC, which has been manufacturing vehicles for the Chinese market in collaboration with Mercedes for around 20 years, has also joined forces with Huawei. BAIC and Huawei jointly launched sales of the Stelato S9 last week – a new premium EV with numerous high-tech functions.
Thanks to several such partnerships with Chinese car manufacturers, Huawei has become an integral part of automotive development in China in recent years. These partnerships always follow a similar pattern. Huawei acts as a technology supplier, while the car manufacturers produce the cars. Huawei then utilizes its strengths in marketing the cars. These cars can be tested and purchased in Huawei shops as easily as smartphones.
This model has already been successfully implemented with the manufacturer Seres, with whom Huawei works under the Aito brand. Models such as the Aito M5, M7 and the luxury SUV M9 all use Huawei’s software and hardware. The Shenzhen-based company is building the Luxeed S7 in partnership with the manufacturer Chery.
According to the Chinese business magazine Caixin, sales under these partnerships amounted to 194,000 units in the first half of this year. The majority of sales came from the Aito brand.
Huawei is also pursuing ambitious plans with the Stelato S9. Two differently configured versions are available, priced at 449,800 yuan (58,000 euros) and 399,800 yuan. As befits a Chinese premium EV, the Stelato comes with luxurious leather seats, massage functions and large displays.
It also features the latest version of Huawei’s self-driving software. However, in September, the Advanced Driving System (ADS) 3.0 will also be rolled out for existing Aito and Luxeed models. One feature that is being particularly advertised on social media is the rear seat, which can be transformed into a home cinema by touching the display. It features a 32-inch projection screen that extends from the roof lining.
The cinema experience is further enhanced by the option of completely darkening the rear windows. The front passenger seat can be automatically folded down to create a comfortable reclining area for the passenger sitting behind them.
It is strategically sound for BAIC to maintain its partnership with Mercedes as well as enter into new alliances with technology companies such as Huawei to have any chance at all in the highly competitive Chinese EV market.
Mercedes must also expect business in China to remain difficult. In the second quarter, the Stuttgart-based company sold significantly fewer cars in China, its most important foreign market, leading to a noticeable profit drop. Sales in the People’s Republic fell by six percent year-on-year, and the net profit of the entire company fell by 15.9 percent to 3.06 billion euros, as the German manufacturer announced.
This is due to fierce competition in China, but the economic situation is also a factor. Even wealthy customers keep a closer eye on their money and prefer waiting before buying a new car.
China has recalled a senior official from Tibet to step up its efforts to clean up the financial sector. According to an article published by the anti-corruption authority CCDI in July, Wang Weidong has been appointed head of the Central Financial Discipline Inspection and Supervision Work Committee. The newly created committee reports to the CCDI.
The 56-year-old has extensive experience in the fight against corruption. His appointment as Party Secretary of the new authority underlines Beijing’s determination to bring the country’s financial sector under even tighter control. The government has been increasingly tough on the financial sector for several years.
Born in the province of Shanxi, Wang began his academic career at Dongbei University of Finance and Economics, where he graduated with a degree in accounting in 1991. He was immediately drawn to the civil service. His career initially took an unspectacular but steady course. He worked in administration for two decades and became deputy secretary general of the CCDI in 2016.
In the country’s top anti-corruption authority, he quickly gained a reputation as a staunch fighter against corruption. In May 2019, Wang was posted to Tibet to head the regional disciplinary commission. Having returned to the CCDI, Wang now faces what is probably his most important task.
China has tightened its grip on the 66 trillion dollar financial industry in recent years, branding bankers as “hedonistic” and emphasizing the Communist Party’s “centralized and unified leadership” over the sector.
The anti-corruption campaign launched in 2021 has shaken the industry, bringing down over 100 financial officials and executives last year. In the first six months of 2024, 32 more high-ranking financial regulators, bankers and financial managers were arrested. At the Third Plenum in July, the Communist Party also emphasized the need for improved supervision of the financial sector.
Supporters see the anti-corruption campaign as an important step towards cleansing the financial sector of unethical conduct. The measures are intended to lead to greater transparency and stability in the long term. However, critics argue that the tighter control by the Communist Party undermines the independence of the financial sector.
This development could further weaken the confidence of the international financial markets in China, as political considerations are increasingly superseding economic principles. The fact that some investment bankers have been asked to accept a salary cap of around three million yuan (approx. 380,000 euros) per year is also causing unrest in the industry. There have also been reports that high-ranking executives have had to return their sometimes generous bonus payments.
This watermelon may already be ripe. But it could be even bigger. At least, that’s the way the food developers see it, who are presenting their giant watermelon varieties at the 23rd Agricultural Expo in Changchun, southern China. And every year they present a melon that is even bigger and tastier. We are already looking forward to next year’s presentation.
‘Some things can also be found in a very similar form at European authorities’
Using the Social Credit System as an example, you analyzed how much criticism legal scholars in China can level at draft legislation. The system is surrounded by many myths. So the first question is: What is it and what isn’t?
There is not just one Social Credit Score that is managed by the central government and that every person and every company has. In fact, there are many pilot projects that fall under the umbrella of Social Credit, but they are all entirely different. Some of them have scores, others do not. Projects with scores usually work with rewards.
What do such projects look like?
For example, there are urban systems, such as in the city of Hangzhou. Citizens can earn points by separating their trash correctly or donating blood. These are voluntary programs. A good score allows citizens to use the fitness facilities at public schools or parks in the city center for a few hours for free. Incidentally, low scores in these projects do not result in any penalties. However, the focus of the Social Credit System – and this is an important point – is clearly on companies and organizations, not individuals. Of course, these are also addressees, but they make up a relatively small proportion. I would say maybe ten percent.
In Germany, information on someone’s creditworthiness can be obtained from Schufa, among others. Is that comparable?
As already mentioned, there are many projects, including financial or credit rating agencies, similar to Schufa. Pilot projects licensed by the central bank from Alibaba, Tencent and other large technology companies have now been restructured into two large personal credit rating agencies, Baihang Credit and Pudong Credit, which are majority-owned by the state. They are part of the broad government initiative ‘Social Credit System,’ which aims to improve the trustworthiness of Chinese citizens, companies, authorities and also the justice system. The groundwork was laid back in the late 1990s, and in 2014 the State Council confirmed the intention with its planning outline for the development of a Social Credit System. The concept of trustworthiness is essentially intended to become a guiding governance paradigm.
In what form and in what spaces do legal scholars voice their criticism?
The traditional channels are academic journals, publications and books. There are also frequent interviews and commentaries by legal scholars, for example, in newspapers or on WeChat accounts of think tanks, service providers and organizations active in the social credit sector. It should be noted that, contrary to what is often assumed, the expertise of legal scholars is very welcome in politics, at least as far as the Social Credit System project is concerned. The project is not a secret surveillance initiative, but a prestige project that should adhere firmly to the law. There is also state funding for projects researching how the Social Credit System project can be harmonized with the applicable law. Colleagues at law faculties in China are regularly invited to contribute their expertise. Of course, they do not have the last word and are always outnumbered by many senior officials from government agencies.
How do scientists know how far they can go with their criticism?
There is no clear red line. The notion of a red line is always somewhat linked to the idea that China has a single all-controlling and guiding leader. I think what we see in the public discourse already shows that it’s not that simple. What can be said when and what consequences it will have is often variable. There are many soft indicators that scientists know very well and use as a guideline. These change depending on the political situation. The Social Credit System is not a particularly sensitive topic and can be discussed relatively controversially.
Because the government has an honest interest in criticizing the system in order to improve it?
Precisely. It would be a problematic, convenient – and also arrogant – conclusion to say that the entire legal discourse in China is uncritical and useless simply because it is partially restricted. Even where Western-socialized eyes only see the repetition of political rhetoric, fascinating twists and details can often be discovered. Not to mention the fact that Chinese political rhetoric as a whole is not sufficiently deciphered and understood in Europe.
Of course, there are spaces where critical discourse takes place – and takes place very openly. To identify these, you must familiarize yourself and find out: What is accepted and what is not.
That is precisely what you have done. Why is it important from our perspective to recognize this and discover these spaces?
In general, we don’t know enough about how the law works in the Chinese party-state – especially internally. What are the mechanisms by which power is distributed, who can exert what influence and how is the legal system developing under the conditions of the data age? These questions only arise when you look closer: Perhaps it is not just Xi Jinping who sits at a lever and can see and direct everything.
Only then can we discover where there may even be parallels. Incidentally, many innovations in the development of the Social Credit System can be found in a very similar form in European authorities, under different names, of course. The ability to generate assessments from data sets to predict individuals’ trustworthiness is revolutionizing administration, and the risks here are also clear: For example, the resignation of Dutch Prime Minister Rutte after an AI used by the tax authorities mistakenly accused thousands of families of fraud. In this respect, parts of the Social Credit system can be seen as a kind of pioneering model instead of being written off as an authoritarian control instrument that would be unthinkable in Europe.
Marianne von Blomberg is working on her doctorate at the University of Cologne and Zhejiang University. In collaboration with Bjoern Ahl, she recently published the study “Debating the Legality of Social Credit Measures in China – A Review of Chinese Legal Scholarship.”