4 ms·

I'm not sure what to make of your scare quotes, but none of what you wrote, on its face, sounds wrong to me. 1. If a lender lends me money, they're shouldering

I'm not sure what to make of your scare quotes, but none of what you wrote, on its face, sounds wrong to me. 1. If a lender lends me money, they're shouldering the risk that I may not repay the loan. That risk should be priced appropriately. 2. Bankruptcy is a valid concept. 3. What Wall Street did was misjudge the risk of their products (whether intentionally or not). Sounds like what the lenders in your example are doing. But the government is punishing the risk-takers. Not sure that's a good way to promote entrepreneurship or innovation. The bankruptcy alone should serve as the deterrent (and signal to future lenders)

pxue 8y ago
All your points are valid. However you're only looking at it in a way that's familiar to you. Here's a personal example, my parents bought a condo in China in a new development area, searched around for renovators and found this shop close by that seemed fairly legit. A show room, full staff, decent looking portfolio, sales people looked legit and they had legit looking supply chain relationship as well. My parents worked out a project scope and plan, estimated the cost, put down 25% for down payment. The shop came in, did a month of work and then disappeared. Job was half done. what happened? They went "bankrupt". Are the shop owners risk takers? Maybe. Did they really try to start a business? Honestly they probably saw an opportunity where a new development area was coming up and came in for the quick buck. Borrowed some money, set up shop to a decent level and then disappear. This isn't an isolated case, lots of examples exist. Am I saying this is the case for everyone? No. But its gotten bad enough that the government had to do something about it. Is it my parents fault for not doing more due diligence? Probably. But it's really really tiresome if you had to do this every. single. time. for everything.
- function_seven 8y ago
  You're right. Thanks for the detail. As far as I know, (and correct me if I'm wrong), China didn't have a credit score system as developed as what we're used to in the US (i.e. Equifax, TransUnion, etc.) But what the social credit system represents is a leapfrog over that to something much more invasive and ubiquitous. I don't want to know if my contractor once smoked in a no-smoking area, of if they buy too many video games. But I do want to be able to check their contractor's license and make sure there aren't complaints.
  - yorwba 8y ago
    > I don't want to know if my contractor once smoked in a no-smoking area, of if they buy too many video games. But I do want to be able to check their contractor's license and make sure there aren't complaints. Some of the pilot projects are intended to work more like that. For example, if you wanted to confirm that "Wenzhou Overseas Travel Ltd." is legit, you could check Wenzhou's portal and search for the name. https://wzcredit.gov.cn/creditSearch/getCompanyDetailInfo.htm?queryType=2&orgCode=&queryName=%E6%B8%A9%E5%B7%9E%E6%B5%B7%E5%A4%96%E6%97%85%E6%B8%B8%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8&uid=c32c3c8d-25d0-11e8-8846-6c92bf35ac06&tableName=scjd_12&paramValue=9133030070431741XF&siteId=867 https://wzcredit.gov.cn/creditSearch/getCompanyDetailInfo.ht... Then you can see some basic information about the company (legal representative Chen Lili, services offered, address, registered capital of 10 million Yuan, founded in 1998...) and then a bunch of information that's supposed to help evaluate their creditworthiness or look them up in other systems. The section for negative information (underlined in orange) is empty. The most recent data is from 2017, though, so who knows whether the system is even updated anymore.
    - function_seven 8y ago
      Yeah, and that's fine. Especially for corporations and other fictitious entities. It's the highly personal aspects of this system that disgust me. The personal habits and nickel-and-dime shit that it vacuums up to determine a score.
      - floe 8y ago
        While not an expert myself, when I have looked deeper into the reporting that makes claims like this, I often find that they're speculating based on one-off statements, not describing an actual extant system. I feel like the US media, even the most respectable publications, don't take appropriate care to separate fact from fiction re: social credit. For example, I found this article really surprising: https://foreignpolicy.com/2018/11/16/chinas-orwellian-social-credit-score-isnt-real/ https://foreignpolicy.com/2018/11/16/chinas-orwellian-social...
        8y ago
yorwba 8y ago
China does have bankruptcy laws, but in this case "One creditor said the company was a sham from the beginning, with fabricated expenditure and cooked books." The debtor running with the money is not something you can simply price into the loan risk, which is why financial fraud is usually illegal. Maybe the creditor was lying to avoid the debt being discharged in bankruptcy, maybe he even bribed the judge to get that verdict, but that's not a problem of the blacklist but of the rest of China's judicial system. The inconvenience of being blacklisted is specifically intended to make people pay back money they falsely claim not to have (which is why it targets expensive "luxury" goods).

pxue 8y ago

All your points are valid. However you're only looking at it in a way that's familiar to you. Here's a personal example, my parents bought a condo in China in a new development area, searched around for renovators and found this shop close by that seemed fairly legit. A show room, full staff, decent looking portfolio, sales people looked legit and they had legit looking supply chain relationship as well. My parents worked out a project scope and plan, estimated the cost, put down 25% for down payment. The shop came in, did a month of work and then disappeared. Job was half done. what happened? They went "bankrupt". Are the shop owners risk takers? Maybe. Did they really try to start a business? Honestly they probably saw an opportunity where a new development area was coming up and came in for the quick buck. Borrowed some money, set up shop to a decent level and then disappear. This isn't an isolated case, lots of examples exist. Am I saying this is the case for everyone? No. But its gotten bad enough that the government had to do something about it. Is it my parents fault for not doing more due diligence? Probably. But it's really really tiresome if you had to do this every. single. time. for everything.

function_seven 8y ago
You're right. Thanks for the detail. As far as I know, (and correct me if I'm wrong), China didn't have a credit score system as developed as what we're used to in the US (i.e. Equifax, TransUnion, etc.) But what the social credit system represents is a leapfrog over that to something much more invasive and ubiquitous. I don't want to know if my contractor once smoked in a no-smoking area, of if they buy too many video games. But I do want to be able to check their contractor's license and make sure there aren't complaints.
- yorwba 8y ago
  > I don't want to know if my contractor once smoked in a no-smoking area, of if they buy too many video games. But I do want to be able to check their contractor's license and make sure there aren't complaints. Some of the pilot projects are intended to work more like that. For example, if you wanted to confirm that "Wenzhou Overseas Travel Ltd." is legit, you could check Wenzhou's portal and search for the name. https://wzcredit.gov.cn/creditSearch/getCompanyDetailInfo.htm?queryType=2&orgCode=&queryName=%E6%B8%A9%E5%B7%9E%E6%B5%B7%E5%A4%96%E6%97%85%E6%B8%B8%E6%9C%89%E9%99%90%E5%85%AC%E5%8F%B8&uid=c32c3c8d-25d0-11e8-8846-6c92bf35ac06&tableName=scjd_12&paramValue=9133030070431741XF&siteId=867 https://wzcredit.gov.cn/creditSearch/getCompanyDetailInfo.ht... Then you can see some basic information about the company (legal representative Chen Lili, services offered, address, registered capital of 10 million Yuan, founded in 1998...) and then a bunch of information that's supposed to help evaluate their creditworthiness or look them up in other systems. The section for negative information (underlined in orange) is empty. The most recent data is from 2017, though, so who knows whether the system is even updated anymore.
  - function_seven 8y ago
    Yeah, and that's fine. Especially for corporations and other fictitious entities. It's the highly personal aspects of this system that disgust me. The personal habits and nickel-and-dime shit that it vacuums up to determine a score.
    - floe 8y ago
      While not an expert myself, when I have looked deeper into the reporting that makes claims like this, I often find that they're speculating based on one-off statements, not describing an actual extant system. I feel like the US media, even the most respectable publications, don't take appropriate care to separate fact from fiction re: social credit. For example, I found this article really surprising: https://foreignpolicy.com/2018/11/16/chinas-orwellian-social-credit-score-isnt-real/ https://foreignpolicy.com/2018/11/16/chinas-orwellian-social...
      - 8y ago

yorwba 8y ago

China does have bankruptcy laws, but in this case "One creditor said the company was a sham from the beginning, with fabricated expenditure and cooked books." The debtor running with the money is not something you can simply price into the loan risk, which is why financial fraud is usually illegal. Maybe the creditor was lying to avoid the debt being discharged in bankruptcy, maybe he even bribed the judge to get that verdict, but that's not a problem of the blacklist but of the rest of China's judicial system. The inconvenience of being blacklisted is specifically intended to make people pay back money they falsely claim not to have (which is why it targets expensive "luxury" goods).