The Chinese Car Invasion Is Coming

China's rising automakers want to sell the future of driving all over the world.
Bloomberg News

On a bright spring day in Amsterdam, car buffs stepped inside a blacked-out warehouse to nibble on lamb skewers and sip rhubarb cocktails courtesy of Lynk & Co., which was showing off its new hybrid SUV.
What seemed like just another launch of a new vehicle was actually something more: the coming-out party for China’s globally ambitious auto industry. 

For the first time, a Chinese-branded car will be made in Western Europe for sale there, with the ultimate goal of landing in U.S. showrooms.
That’s the master plan of billionaire Li Shufu, who has catapulted from founding Geely Group as a refrigerator maker in the 1980s to owning Volvo Cars, British sports carmaker Lotus, London Black Cabs and the largest stake in Daimler AG—the inventor of the automobile. 

Li is spearheading China’s aspirations to wedge itself among the big three of the global car industry—the U.S., Germany and Japan—so they become the Big Four.
“I want the whole world to hear the cacophony generated by Geely and other made-in-China cars,” Li told Bloomberg News. 

“Geely’s dream is to become a globalized company. To do that, we must get out of the country.”

Inside a London EV Co. plant in Coventry, U.K. The company, owned by China’s Geely Group, makes electric black cabs used in London.

He’s not alone: At least four Chinese carmakers and three Chinese-owned startups—SF Motors Inc., NIO and Byton—plan to sell cars in the U.S. starting next year. 

At the same time, Warren Buffett-backed BYD Co. is building electric buses in California; Baidu Inc.is partnering with Microsoft Corp., TomTom NV and Nvidia Corp. on a self-driving platform; and Beijing-based TuSimple Inc. is testing autonomous-driving big rigs in Arizona.
The industry is set for more upheaval as China unravels a two-decade policy that capped foreign ownership of carmaking ventures at 50 percent. 

The change may energize companies such as Volkswagen AG and Ford Motor Co. to seek a bigger piece of the world’s largest car market and allow Tesla Inc. to set up a fully owned unit. 

Carmakers may get better visibility of their futures, and those Chinese companies that fear losing sales at home may sense a greater impetus to go abroad.
“They are in a better position now than they ever have been,” Anna-Marie Baisden, head of autos research in London with BMI Research, said of Chinese carmakers. 

“They’ve had so much time working with international manufacturers and have become a lot more mature.”
We’ve seen this movie before from China—in the smartphone industry. 

The nation used the shift in technology from basic flip phones to hand-sized computers to dominate the manufacturing industry, trouncing then-dominant makers from Finland, Sweden, the U.S., Japan and Germany.
Last year, three of the top five smartphone handset makers in the world were Chinese, according to Gartner Inc.
Yet the sequel may take longer to become a hit, given the brand loyalty that has existed since Henry Ford debuted the Model T in 1908. 

How will Chinese automakers convince Midwesterners to give up their Ford F-150 pickups or Tokyo residents to switch from their Toyotas?
“Chinese carmakers intend to come over, but what need will they fill?” said Doug Betts, senior vice president of global automotive practice at J.D. Power. 

“What is the reason to buy their cars?”
Chinese cars probably would compete more directly with Japanese and Korean models, said Bob Lutz, the retired vice chairman of GM. 

American consumers mostly cross-shop Asian brands.

Geely Chairman Li Shufu plans to launch a global automaker from China. “To do that,” he says, “we must get out of the country.”

“If they start coming in, they won’t be any more competent than Korean and Japanese cars,” Lutz said. 

“They would probably take share from other Asian brands because the vehicles will be more Asian in character. They’re not going to get much market share.”
And then there’s President Donald Trump. 

Trade tensions between the U.S. and China are simmering as both nations move to slap tariffs on each other’s products. 

This month, China said it would levy an additional 25 percent levy on about $50 billion of U.S. imports, including automobiles and aircraft. 

The move matched the scale of proposed U.S. tariffs, with Trump threatening an escalation.
That’s not to say the road is impassable. 

A few decades ago, South Korea’s Hyundai Motor Group was knocked for fragile engines and rust-sensitive body panels. 

Now it’s one of the five biggest manufacturers in the world, selling about 1.25 million cars in the U.S. last year, according to Bloomberg Intelligence. 

The group also has factories in Alabama and Georgia.
“Competitors emerging from China must be taken seriously,” said Matthias Mueller, former chief executive officer of Volkswagen, Europe’s biggest carmaker. 

“I visited China for the first time in 1989, and the development that has happened there since then is just impressive.”
The creeping global influence of China’s industry isn’t limited to getting their wheels on U.S. and European roads.
Equally important, the Chinese are getting under the hoods of foreign brands by buying up parts suppliers, making batteries for the world’s EV fleet and corralling supplies of the metals that give those batteries life.
Automakers such as Geely, Chery Automobile Co. and BYD started talking a decade ago about cracking the U.S. auto market with an array of low-cost passenger vehicles. 

Those efforts stalled, so the industry built a global presence through acquisitions.
Chinese companies have announced at least $31 billion in overseas deals during the past five years, buying stakes in carmakers and parts producers, according to data compiled by Bloomberg.

The most prolific buyer is Li, who spent almost $13 billion on stakes in Daimler and truckmaker Volvo. 

Tencent Holdings Ltd., Asia’s biggest internet company, paid about $1.8 billion for 5 percent of Tesla.
As software and electronics become just as critical to a car as the engine, China is ensuring it doesn’t lag behind in that market, either. 

Baidu, owner of the nation’s biggest search engine, announced a $1.5 billion Apollo Fund to invest in 100 autonomous-driving projects during the next three years.
“We have secured a chance to compete in the U.S. market of self-driving cars through those partnerships,” Li Zhengyu, a vice president overseeing Baidu’s intelligent-driving unit, told Bloomberg News. 

“Everyone has a good chance to win if it has good development plans.”
“I want the whole world to hear the cacophony generated by... made-in-China cars”
Baidu and Tencent are among the Chinese corporations racing Alphabet Inc.’s Waymo, Uber Technologies Inc. and the major automakers to develop autonomous driving, with an aim for mass adoption by 2021.
The government’s aspiration to deploy 30 million autonomous vehicles within a decade is seeding a fledgling chip industry, with startups like Horizon Robotics Inc. emerging to build the brains behind those wheels.
Then there’s Contemporary Amperex Technology Ltd., the maker of electric-vehicle batteries that’s planning a $1.3 billion factory with enough capacity to surpass the output of Tesla and dwarf the suppliers for GM, Nissan and Audi.
The Ningde-based company plans to raise 13.1 billion yuan as soon as this year by selling a 10 percent stake, at a valuation of about $20 billion. 

The bulk of the new funds would pay for a manufacturing plant that would make CATL the world’s biggest maker of Lithium-ion batteries.
CATL already supplies Volkswagen and owns 22 percent of Finland’s Valmet Automotive Oy, a contract manufacturer for Daimler’s Mercedes-Benz.
To juice those batteries, Chinese companies are leading the way in securing necessary raw materials like cobalt and lithium. 

Chinese companies make about 60 percent of the world’s refined cobalt, according to trading firm Darton Commodities Ltd.
China Molybdenum Co. is the world’s second-biggest cobalt miner after Glencore Plc.

The company, with a market value of more than $24 billion, became a major force in battery metal in 2016 after buying control of the cobalt-rich Tenke Fungurume mine in the Democratic Republic of Congo.

Glencore said in March it agreed to sell about a third of its output during the next three years to GEM Co., a Chinese supplier of battery chemicals.
“China has made no secret of its ambition to have a really big and powerful auto industry,” said Michael Dunne, president of consulting firm Dunne Automotive Ltd. in Hong Kong. 

“China does intend to lead and dominate the electric-vehicle industry.”
The Chinese government sees EVs as its best chance to seize global leadership in an emerging powertrain technology. 

Cleaning the notoriously smoggy air and reducing a dependency on foreign petroleum are bonuses.
China, already the world’s biggest vehicle market, overtook the U.S. as No. 1 for EVs in 2015. 

This week’s Beijing auto show will feature 174 EV models, with 124 of them developed domestically.
Xi Jinping showed his determination to rewrite the rules of the automotive industry during a 2014 trip to Shanghai. 

“Developing new-energy vehicles is the only way for China to move from a big automobile country to a powerful automobile hub,” he said when visiting SAIC Motor Corp., a Shanghai government-owned company that partners with GM and Volkswagen in China.
That set off a chain reaction. 

SAIC, the country’s largest automaker by unit sales, invested more than 20 billion yuan in new-energy vehicles, or NEVs, which include electric cars, plug-in hybrids and fuel-cell vehicles.
Western companies dominated for almost a century because they refined the internal-combustion engine. 

The electric motor threatens to erase that disadvantage, said Hu Xingdou, an economics professor at the Beijing Institute of Technology.
“NEVs can help China to become a global leader in the auto industry,” Hu said. 

“China and the rest of the world can now start from the same starting line.”

At the Amsterdam launch event for the Lynk 02, which will become the first Chinese-branded car to be made in Western Europe for sale there.

First in the blocks is Li, a 54-year-old former photographer who started his career with 2,000 yuan from his father and now has a net worth estimated at about $12 billion, according to the Bloomberg Billionaires Index.
Though Chinese-branded passenger cars are sold throughout Southeast Asia and Africa, none have made it to the U.S. or Europe. 

Li first promised at the 2006 Detroit auto show that he would crack the U.S. market within two years with Geely’s Free Cruiser compact.
That didn’t happen, so he came up with what he considers a better method: make Lynk’s new SUV—called the 02—in Belgium. 

The car will be available from the first half of 2020 in Europe, and then Li plans to hopscotch across the ocean.
“This is the next step,” said Mike Jackson, chief executive officer of AutoNation Inc., the largest U.S. auto-dealer group. 

“And it’s a doable step.”

Rogue Nation

Liu Xiaobo’s Death Pushes China’s Censors Into Overdrive
By AMY QIN

A vigil for the Chinese dissident Liu Xiaobo in Hong Kong on Saturday. China’s censors blocked images of Mr. Liu and of people commemorating him. 

BEIJING — It came as little surprise when, after the death of the dissident Liu Xiaobo last week, China’s vast army of censors kicked into overdrive as they scrubbed away the outpouring of grief on social media that followed.
The accounts of censorship have been mostly anecdotal. 

But systematic research from the Citizen Lab at the University of Toronto’s Munk School of Global Affairs shows that there was a “significant shift” in censorship techniques in the days after Mr. Liu’s death, particularly on WeChat, the popular messaging app from Tencent.
On WeChat, which has more than 768 million daily active users, the number of keyword combinations that were blocked greatly increased, according to the report that the Citizen Lab published on Sunday. 

Additions to the blacklist included general references to his death like “Xiaobo + died” in Chinese and in English, and even just his name “Liu Xiaobo,” effectively censoring any messages that mentioned him.
The Citizen Lab said it was also the first time that images were automatically filtered in private one-on-one chats on WeChat. 

Blocked images included photographs of Liu Xiaobo and of people commemorating him.

One of the distinguishing features of WeChat is that it does not notify users when their messages are blocked. 

The service also makes a distinction between accounts registered to phone numbers from mainland China and phone numbers from elsewhere.

In one experiment, researchers at the Citizen Lab found that a photo of Liu Xiaobo posted to an international user’s WeChat social media feed was visible to other users abroad but was hidden from users with Chinese accounts.
The heightened — yet uneven — censorship in recent days has elicited frustration and confusion among Mr. Liu’s supporters.
On the day after Mr. Liu’s death, one user posted on his WeChat feed: “‘Did you see what I just sent?’ ‘No, I can’t see it.’ For the last two days, this has been the constant question and answer among friends.”
The aggressive attempt at censorship is just the latest indication of the strong grip that the Chinese government maintains on local internet companies. 

In addition to automatically filtering certain keywords and images, internet companies like Baidu, Sina and Tencent also employ human censors who retroactively comb through posts and delete what they deem as sensitive content, often based on government directives.
Failure to block such content can result in fines for companies or worse, revocation of their operational licenses. 

Censors have been on especially high alert this year in light of the Communist Party’s 19th National Party Congress in the fall.
Over the years, the constant cat-and-mouse game between Chinese censors and internet users has led to the rise of a robust internet culture in which censorship is normalized and satire and veiled references are par for the course.
So even as censors stepped up scrutiny in recent days, many savvy Chinese internet users found ways to evade those efforts. 

In tributes to Mr. Liu, users referred to him as “Brother Liu” or even “XXX.” 

They posted passages from his poems and abstract illustrations of Mr. Liu and his wife, Liu Xia.
Over the weekend, however, the tributes gave way to scathing critiques as friends and supporters of Mr. Liu reacted angrily to the news of Mr. Liu’s cremation and sea burial under strict government oversight.
One user took to his WeChat feed on Sunday to express disgust with the use of Mr. Liu’s corpse in what some called a blatant propaganda exercise. 

“Swift cremation, swift sea burial,” he wrote. 

“Scared of the living, scared of the dead, and even more scared of the dead who are immortal.”

Rogue Nation, Rogue App

University of Toronto researchers uncover extent of WeChat and China’s censorship on 709 crackdown
By NATHAN VANDERKLIPPE -- BEIJING

Even as it was arresting, torturing and imprisoning human-rights lawyers, the Chinese government blocked discussion of its actions on local social media, including images distributed by those drawing attention to what had taken place.
Researchers at the University of Toronto’s Citizen Lab discovered that WeChat, China’s digital-communication lifeblood, has censored 42 combinations of terms related to the “709 crackdown,” so called because it began on July 9, 2015.
The research underscores how Chinese authorities assert broad control over information inside the country, eliminating unfavourable information.
Nearly 250 lawyers and activists have been questioned, detained and arrested since 2015. 

Several have provided what foreign governments, including Canada, have called credible details of torture. 

Twelve of their names are included among the blocked terms.
The digital redactions illuminate how Chinese censorship is “reactive to news events. And compared with other events or categories of censored keywords, the 709 crackdown is one of those censored on a higher frequency,” said Lotus Ruan, a research fellow at Citizen Lab.

Inside China, information on the lawyers “has been sanitized or harmonized, so a lot of information is officially-approved information.”
And in what the researchers called a new revelation, China’s sophisticated censorship tools have expanded to include the ability to peer at digital photographs and delete those deemed sensitive. 

The blocking even extends to altered images.
“This finding is the first documentation of image filtering on the app,” the researchers wrote in a report titled We (can’t) Chat. 

It “reveals the high level and extent of censorship enforced on this popular chat app.”
Those images included pictures of people holding signs with the slogan “Oppose Torture. Pay attention to Xie Yang” – one of the arrested lawyers who provided chilling details of his interrogation. 

Mr. Xie told his lawyers he was punched, kicked and kneed by interrogators who left him temporarily crippled and at one point threatened: “I’m going to torment you until you go insane.”
Chinese suppression of speech goes beyond eliminating those details from its domestic Internet. 

On March 28, lawyer Chen Jiangang, who has represented Mr. Xie, also received a message that his WeChat account had been permanently cancelled.
Mr. Chen so commonly experiences chat censorship that he said “it’s no longer strange at all.” 

But for others, it can cause fear, he said, by driving home the feeling that they are being “monitored or taken noticed of by the security police.”
That’s not idle speculation; new regulations issued last year specify that prosecutors and police have the right to collect social-media comments as “electronic data.”
Often, however, censorship on platforms such as WeChat is done invisibly, meaning a sender doesn’t know that a blocked message has not reached its recipient. 

Message blocking is primarily directed at users with accounts registered to mainland China phone numbers. 

Messages and images are more commonly expunged in group chats than individual conversations.
Images are also censored from WeChat Moments, which functions somewhat similar to a Facebook news feed. 

“Higher attention is being paid to group chat and Moments,” Ms. Ruan said.
Searches related to the crackdown on lawyers were censored, too, on Sina Weibo, a Twitter-like service, where 60 keyword combinations were blocked.
Stripped of other sources of information, users of the local Chinese Internet are left with only the government narrative.
On Baidu, the primary search engine in a country that blocks access to Google, the top result for “709 case” points to a July 7, 2016, editorial in the nationalist tabloid newspaper, Global Times, which argued that it was a greater violation of law for foreign countries to attack Chinese human rights, than for China to arrest those it deems subversive.
Chinese authorities say that the lawyers received fair legal treatment, while local propaganda films have called defenders of human rights “agents of Western powers.”
Local censorship of the lawyers crackdown extended to critical statements posted by Western countries decrying Chinese actions, which Web users were unable to repost.
The Citizen Lab researchers said their work “highlights the challenges faced by individuals, NGOs, and the international community in conducting advocacy work related to the ‘709 Crackdown,’ as well as many other politically sensitive cases in China.”

Inventivity With Chinese Characteristics

China invents the digital totalitarian state
The Economist

GARY SHTEYNGART’S novel of 2010, “Super Sad True Love Story”, is set in a near future when the Chinese yuan is a global currency and people all wear an “apparat” around their neck with RateMe Plus technology. 

Personal details are displayed in public on ubiquitous Credit Poles, posts on street corners with “little LED counters at eye level that registered your Credit ranking as you walked by.” 

The protagonist’s are summed up thus:
LENNY ABRAMOV. Income averaged over five-year span, $289,420 yuan-pegged… Current blood pressure: 120 over 70. O-type blood… Thirty-nine years of age, lifespan estimated at eighty-three…Ailments: high cholesterol, depression…Consumer profile: heterosexual, nonathletic, non-automotive, nonreligious… Sexual preferences: low-functioning Asian/Korean…Child abuse indicator: on… Last purchases: bound, printed, nonstreaming Media artifact” [ie, book].
The novel is a fictional dystopia about the destruction of privacy. 

China’s Communist Party may be on its way to inventing the real thing. 

It is planning what it calls a “social-credit system”. 

This aims to score not only the financial creditworthiness of citizens, as happens everywhere, but also their social and political behaviour. 

It is not yet clear how extensive the system will be, nor whether it will work, nor how far it will withstand the criticism ranged against it in the state-controlled media. 

But an outline is complete and some of the building blocks are in place. 

The early signs are that China is starting on the most ambitious experiment in digital social control in the world.
A pilot scheme in Suining county, in Jiangsu province north of Shanghai, gives clues about what such a system might mean in practice. 

Starting in 2010, the local government awarded people points for good behaviour (such as winning a national honour of some kind) and deducted points for everything from minor traffic offences to “illegally petitioning higher authorities for help”. 

Those who scored highest were eligible for rewards such as fast-track promotion at work or jumping the queue for public housing.
The project was a failure. 

The data on which it was based were patchy. 

Amid a public backlash, a report in China Youth Daily, a state-owned newspaper, criticised the system. 

It said “political” data (such as petitions) should not have been included, declaring that “people should have rated government employees and instead the government has [rated] the people.” Another state-run newspaper, Beijing Times, even compared the scheme with the “good citizen” certificates issued by Japan during its wartime occupation of China.
But the party and government seem undaunted, issuing outline plans for the social-credit system in 2014 and more detailed guidelines this year. 

About 30 local governments are collecting data that would support it. 

The plan appears hugely ambitious, aiming explicitly to influence the behaviour of a whole society. By 2020, Chinese officials say, it will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.”
The project is a response to the party’s biggest problems: the collapse of confidence in public institutions, and the need to keep track of the changing views and interests of China’s population (without letting them vote). 

It seeks to collect information on the "honesty" of ordinary citizens, public officials and companies alike.

A question of trust
Despite years of economic growth, popular discontent at widespread corruption has grown stronger. A series of scandals about everything from shoddy housing to out-of-date vaccines has led to public cynicism about companies and the government’s ability to enforce rules. 

Social-credit scoring aims to change that by cracking down on the corrupt officials and companies that plague Chinese life. 

And it aims to keep a closer track on public opinion. 

In a society with few outlets for free expression, big data might paradoxically help make institutions more accountable.
But it could also vastly increase snooping and social control. 

In other countries there have been many scare stories about Big Data leading to Big Brother. 

Most have proven false. 

But China is different. 

It is a one-party state, with few checks on its power, a tradition of social control and, in Xi Jinping, a leader even more prone to authoritarianism than his immediate predecessors. 

The extent of social-credit scoring will depend on what the government intends, whether the technology works and how the party responds to public concerns.
Start with intent. 

The “planning outline” published in 2014 said the government “pays high regard to the construction of a social-credit system”—suggesting the project has the imprimatur of Xi and Li Keqiang, the prime minister. 

Social credit, it declared, “is an important component …of the social-governance system”: in other words, it is part of governing the country.
The paper did not set out how the system would work but was clear about its aims. 

They are to strengthen confidence in the government by improving its efficiency through big data; to crack down on companies that cheat and sell unsafe goods; and to “encourage keeping trust and punish breaking trust…throughout the entire society”. 

Social credit, it concluded, would be “an important basis for…building a harmonious socialist society”.

Getting to know you
Such thinking is in keeping with the party’s long record of using bureaucratic tools to restrict freedom and invade privacy in the name of public order. 

Almost everyone has a hukou (household registration) document that determines where citizens can get public services. 

Most people once had a dang’an (personal file) containing school and work reports, and salary details. 

Both controls have been relaxed, notably the dang’an. 

But both still exist.
Increasing numbers of people in government, state-owned firms and universities are required to hand over their passports “for safe keeping”. 

Holders of passports in some parts of the restless regions of Xinjiang and Tibet have also been told to hand them over to the police.
Punishments and rewards for behaviour are woven into the government’s activities. 

The one- (now two-) child policy remains the extreme example of a supposed greater good trampling over private interests. 

But it is not the only one. 

The Elder-care law of 2013 requires all adult children, on penalty of fines or jail, to visit parents over 60 “often” (the courts define what counts as often). 

A few people have been fined under the law and one official said their offences might be entered onto their dang’an, though there is no sign that this has been done.
China has “an administrative rewards system” in which hundreds of thousands of people a year receive honours and titles, such as “outstanding cadre”, “spiritually advanced individual” and “civilised village”. 

Winners get money, a higher pension, better health insurance and the right to jump the queue for public housing. 

The honours system is valued by the leadership. 

Last year, all seven members of the country’s highest decision-making body, the Standing Committee of the Politburo, attended the awards ceremony of the National Model Worker programme.
Wholesale surveillance, increasingly of the digital sort, is a central pillar of Chinese communist rule. 

A system of block-by-block surveillance called “grid management” is being set up in several parts of the country: police and volunteers keep tabs on groups of a few hundred people, supposedly to ensure the rubbish is collected and disputes resolved. 

It is part of a tradition of self-policing that stretches back to the Song dynasty in the 11th century.
Newer forms of monitoring involve the ubiquitous use of closed-circuit television cameras. 

In 2009 China had 2.7m of them; now it may have overtaken America as the country with the largest number of CCTV devices. 

According to Jack Ma, head of Alibaba, China’s largest internet firm, the company’s home town of Hangzhou has more surveillance cameras than New York, a somewhat larger city.
As internet use has grown (see chart), so have China’s comprehensive controls in cyberspace—from the Great Firewall, the system that blocks access to tens of thousands of websites (Economist.com among them); to the Golden Shield, an extensive online surveillance system; and the Great Cannon, a tool to attack hostile websites. 

China’s cyber-censors can suspend internet or social-media accounts if their users send messages containing sensitive terms such as “Tibetan independence” or “Tiananmen Square incident”.

The scale of the data-collection effort suggests that the long-term aim is to keep track of the transactions made, websites visited and messages sent by all of China’s 700m internet users. 

That would be enormously ambitious but probably not impossible. 

According to leaked documents, America’s National Security Agency can collect 42bn internet records a month and 5bn mobile-phone location records a day.
To make such surveillance work, the government has to match the owners of devices with the digital footprints they leave. 

So laws passed in 2012 and 2016 require internet firms to keep their customers’ real names and other personal information. 

But there are lots of fake registrations. 

And it is unclear how censors plan to tackle virtual private networks, which mask a user’s IP address.

Who’s naughty and nice
The emerging social-credit system builds on this history of monitoring and control of people’s private lives. 

Lists are central to the project: you need lists of identities to order the data you gather. 

And lists are a Chinese speciality. 

China’s tourist authority keeps a no-fly list for ill-mannered travellers, who can be banned from going abroad for up to ten years. 

The Cyberspace administration keeps a “white list” of favoured media firms that may sell their articles to other outlets. 

And so on.
The list at the heart of the social-credit system is called the “judgment defaulter’s list”, composed of those who have defied a court order. 

If two people or companies have a contract dispute, or if couples are fighting over a divorce or child support, the parties can go to a civil court for judgment. 

If the losing party then defaults on payment, he, she or it is put on the list. 

Names of offenders are displayed on an electronic crawl outside court houses. 

According to the supreme court, there were 3.1m defaulters on the list at the end of 2015.
All countries have problems enforcing civil judgments in financial cases, so the list may not look unusual. 

But it is. 

It is exceptionally long, and made available to dozens of government departments and party organisations, all of which can apply their own sanctions to defaulters. 

People on the list can be prevented from buying aeroplane, bullet-train or first- or business-class rail tickets; selling, buying or building a house; or enrolling their children in expensive fee-paying schools. 

There are restrictions on offenders joining or being promoted in the party and army, and on receiving honours and titles. 

If the defaulter is a company, it may not issue shares or bonds, accept foreign investment or work on government projects. 

By August 2016 defaulters had been stopped from buying airline tickets about 5m times. 

This goes far beyond normal legal enforcements.

Sins with Chinese characteristics
From blacklisting debt-defaulters the system could be expanded a bit, say, to keep track of companies that sell poisoned milk or build shoddy houses. 

Yet guidelines issued in May and September suggest it could go much further. 

They call the defaulters list “an important component of social-credit information”, implying that it is part of a larger system, and that financial offences are only one category of wrongdoing. 

Other sorts of “untrustworthy behaviour” meriting attention include: “conduct that seriously undermines…the normal social order…seriously undermines the order of cyberspace transmissions”, as well as “assembling to disrupt social order [and] endangering national defence interests”. 

Such broad categories imply the system could be used to rate and punish dissent, expressions of opinion and perceived threats to security.
Although not spelled out clearly, the guidelines could, on the face of it, allow the state to integrate its many databases: everyone’s hukou and dang’an, information from electronic surveillance, the tourist blacklist, the national model-worker programme and more. 

Even regulations on video games published in December say that firms and gamers that violate the rules could be blacklisted and inscribed in the social-credit database. 

At worst, the social-credit project could become a 360-degree digital-surveillance panopticon.
That may sound like scaremongering. 

After all, Google, Facebook, data-brokers and marketing companies in Western countries—even American presidential-election campaigns—all hold vast quantities of personal information without causing serious harm to civil liberties, at least not so far.
But China treats personal information differently from the West. 

In democracies, laws limit what companies may do with it and the extent to which governments can get their hands on it. 

Such protections are imperfect everywhere. 

But in China they do not exist. 

The national-security law and the new cyber-security law give the government unrestricted access to all personal data. 

Civil-liberty advocates who might protest are increasingly in jail. 

And companies that hold data, such as Alibaba, Baidu (China’s largest search engine) and Tencent (which runs a popular social-messaging app) routinely obey government demands for data.
Big-data systems in democracies are not designed for social control. China’s explicitly would be. 

And because its leaders consider the interest of the party and society to be the same, instruments of social control are used for political purposes. 

Earlier this year, for instance, the party asked China Electronics Technology Group, one of the country’s largest defence contractors, to develop software to predict terrorist risks on the basis of people’s job records, financial background, consumption habits, hobbies and data from surveillance cameras. 

Sifting data to seek terrorists can easily morph into looking for dissidents. 

It is telling that Western intelligence agencies have tried to use data-mining schemes to identify individual terrorists, but failed because of an excess of “false positives”.
So can a vast social-credit system work? 

The Chinese face two big technical hurdles: the quality of the data and the sensitivity of the instruments to analyse it. 

Big-data projects everywhere—such as the attempt by Britain’s National Health Service to create a nationwide medical database—have stumbled over the problem of how to prevent incorrect information from fouling the system (this undermined the Suining experiment, too). 

Problems of bad data would be even more onerous in a country of 1.3bn people. 

Vast treasuries of data would also give big incentives for cyber-criminals to steal or change information.

How to analyse the data would be equally problematic. 

The feature of the social-credit system that has attracted the most attention and alarm is the notion of ascribing “credit scores” (points) to social and political activity. 

Here, the model seems to be America’s marketing industry. 

Companies work out credit scores that predict people’s patterns of consumption based on things such as job security, health risks and youth delinquency. 

But errors abound. 

The World Privacy Forum, a non-profit organisation, says credit scores are based on hundreds of data points with no standards of accuracy, transparency or completeness. 

As the report concluded, “error rates and false readings become a big issue.” 

Garbage in, garbage out.

What could go wrong?
The government is well aware of these difficulties. 

It has allowed an unusual amount of discussion on them in state-run media, suggesting it may be testing the waters before deciding how far to plunge in. 

A recent high-level “social-credit summit” in Shanghai, for example, talked about how scores can be checked, and mistakes rectified; many argued that legal protections needed to be improved. 

Zhang Zheng, director of the China Credit Research Centre at Peking University, said multiple problems remain unsolved, and that the administration needed to be reined in.
A commentary in Beijing Times complained about plans to punish people who do not pay their electricity bills by limiting foreign travel and bank borrowing. 

“I have never opposed the establishment and improvement of a credit-information system,” wrote the author, Yang Gengshen. 

“I am only against using credit to expand the power of the strong and further compress the space for civil rights.”
Much about the social-credit system remains unclear. 

The government has not yet determined whether it wants the system mainly for cracking down on crooks or to go the full Big Brother. 

It is uncertain about how much of the information it holds should be incorporated into the system. The surveillance technology is largely untested at the vast scale of China. 

And the fragmentation of China’s intelligence agencies would have to be overcome.
But the government is creating the capacity for a long-tentacled regime of social control. 

Many of the elements are ready: the databases; the digital surveillance; the system of reward and punishment; and the we-know-best paternalism. 

What remains is to join the pieces together. 

If and when that is done, China would have the world’s first digital totalitarian state. 

As another character in “Super Sad True Love Story” writes to a friend: “This is what happens when there’s only one party and we live in a police state.”