The Social Credit System (SCS) is the Chinese government’s response to its chronic difficulty in the application of laws and regulations, a problem that is often framed in terms of a lack of “trust” within society. Besides its endemic problem with unpaid debts, the country has been rocked by scandals in important areas, such as food security, medication safety, hazardous materials storage, and human trafficking. These scandals have shocked the wider public, seeming to reveal deeper moral failings that threaten to undermine the regime’s legitimacy.
Such problems are inherent to the very nature of the Chinese regime. With no separation of powers, laws and regulations are often applied arbitrarily, creating the potential for corruption, which compromises public order and hinders economic development. The systematic repression of civil society and the progressive weakening of structures of social control such as the work unit or the household registration system (hukou) have also led to a chronic lack of trusted intermediaries. Some of these roles are now filled by market mechanisms (employment and housing, which are both highly selective, as well as consumption, which has become a sign of distinction), but the market cannot operate efficiently within an incomplete legal system. Notably, there is no mechanism for declaring personal bankruptcy, and the available bank credit options are ill-suited and under-regulated (Chorzempa 2018), which leads people in financial difficulty to take on even more debt, with no legal way out…