China Social Credit System

Last week I attended an event at the Herti School of Governance about China’s Social Credit System (SCS).

The SCS is this bizarre system in which China gives citizens positive and negative scores based on their actions. It is what’s normally represented in the media as an implementation of one of black mirror episodes.

I was surprised by what I learned from the sessions. I usually read about the SCS from American media, but during the event the two lecturers were researchers on the topic. They did work on the ground to understand the system, and surveyed locals to understand their perception of it.

Until today there is no unified Social Credit System across China. Each local district gets to design its own system. The two examples that were mentioned in the event were the Taxi drivers system, and Gangwan sub-district SCS.

In the Taxi drivers system the drivers were split in groups of 10. There was one observer out of the 10 whose responsibility was to assign and report the score. Based on this score drivers were benefiting or losing access to governmental services. They also were forced to have their scores on top of their taxi. Think Uber rating but with real life consequences other than being blocked from the service. After implementing the program they saw a decrease in crime rates, increase in returning forgotten items, and overall less problems. And it led to an increase in blood donations from Taxi drivers, as this leads to increasing the driver’s score!

The Gangwan sub-district SCS was more interesting. They created a list of 11 positive, and 47 negative actions that could increase or decrease your score. Among the positives were sweeping snow, looking after elderly, volunteering, and blood donations. The negatives included burning trash, blocking public spaces, and family planning breach!

There are local collection officers whose jobs is to assign scores and report them to the government. Based on the scores citizens get access to government benefits up to cash in some cases, or they get denied access to services. Sometimes it reaches public shaming by announcing the lowest scorers regularly through billboards on the streets. It sounds crazy to me.

I learned that the system isn’t unified across the country yet. It is not high tech as the media portrays it. Actually these collection officers collect the scores on paper then upload them monthly to computers (they themselves get or lose credit based on how late they submit the data).

Another misconception is that it is more of a parallel legal system rather than an oppression tool. The government has much easier oppression tools than creating such complex system.

The second session of the evening was more interesting. A researcher showed a survey her team conducted in China with 2000 citizens in places where the SCS was implemented. Only 11% were aware of it. And of those who were aware, they were in favor of it, seeing it a good thing. I later in the Q&A I told her I am not surprised as I saw how people approve dictatorship if there is enough brainwash.

There are multiple SCS systems in China. Some are even privately owned by companies like Alibaba and Tencent. There is tension between the government one and the private one, in some cases the government forced the companies to stop using their systems.

The last part was intriguing, as the researcher questioned some activities that are done in the EU. For example in Germany the credit score is handled by a single company (SCHUFA), and there is no public data as to what influences the score by how much. They also mentioned that Berlin is testing facial recognition cameras in Sudkreuz train station. Those things are already happening around us and not getting the same attention.

German Fragility

I read the news of Merkel stepping down by 2021 and the rise of AfD and the Green in the latest local elections. Such news spur a lot of fear discussions in my immigrants, mostly Egyptian circles.

I am not as scared as my friends express. Part is because this is something I can’t control. And part because I lived in Egypt between 2011 to 2015. This period was a real roller coaster of how things can turn upside down multiple times in few years and end up sideways or even far worse than what it was before.

I think this is the strongest test of the German system’s fragility since unification. One of the reasons I keep fighting for liberty and freedom of speech to levels I am sometimes unable to express publicly is because people underestimate the fragility of the political systems they live in. Those systems can collapse easily and the only barrier to preventing this is having strong civil liberties.

We give up our rights under the assumption of good intentions. We make the systems tightly coupled because it is easier and faster to make decisions. We shouldn’t. Because it takes a single bad actor to destroy all the progress we have made.

The Arab tech scene and its impact on Egypt

Egypt has been losing its Arab leadership politically, and I can say it is also coming to tech.

Gulf led by Saudi Arabia and UAE understands that oil is running out, and the world won’t be as dependent on it as before. So they started finding new ways to secure their future.

Luckily, we are witnessing the second industrial revolution, this time it is happening in tech. So Saudi and UAE decided to double down on tech investments, and the first macro and micro trends started to show up.

Saudi’s Public Investment Fund (PIF) the country’s main sovereign wealth fund invested $3.5 billion in Uber earlier this year.

It also announced a new 100 billion – with a b – dollars fund with Japan’s softbank to invest in tech startups.

Then UAE announced it will be the first place in the world to build Hyperloop to connect Dubai to Abu Dhabi. Hyperloop is a new technology that enables the transportation of humans and goods at 1200km/h without flying. The original paper of the technology was published by Elon Musk. The company that will build the Hyperloop in UAE is Hyperloop One, a company founded by ex-SpaceX employees and one of silicon valley’s top investors.

Earlier this week, Emaar’s Chariman (The company behind Burj Khalifa) announced that he is building a new ecommerce startup with $1 billion investment, half of it coming from Saudi’s PIF, the other half comes from him and other Emarati investors. The new venture will be headquartered in Riyadh.

Yesterday, Saudi announced another 200 million Saudi Riyal VC fund to support local tech startups. It is still unclear how the fund will be deployed and managed.

I think you only need two kinds of people to create a technology hub: rich people and nerds – Paul Graham, founder of Y Combinator

Gulf has rich people, it lacks nerds. Egypt has higher ratio and number of nerds than Gulf.

To attract these nerds, most of whom already left Egypt to chase better opportunities in Europe and US, these gulf companies are paying hefty sums to attract them to go and work there.

Careem, Uber’s middle east competitor is paying unmatchable salaries for engineers to join its Dubai office, they are even opening an office in Berlin to attract Arab engineers who don’t want to leave Germany. They are paying higher than most of Germany based companies.

These new ventures need engineers, and with such levels of funding they will do whatever to get them on board.

I do believe this snowball will keep getting bigger, funding will increase in the Arab world, with competition between different Gulf states to attract tech talent.

There could be a bubble, mostly because these companies are not started by nerds but rather by rich people who think if they put enough money into it, it should work. Which is also another reason why we will see most of these companies as localized copycats to successful global ones, mostly in ecommerce, logistics, and payments since these have the easiest to understand business models.

Overall I think this is mostly good, because if things are changing it means there is a chance for someone to create something really innovative on a global scale. Even if most of the current experiments fail the knowledge will be passed to other people and everyone will learn from their mistakes.

I lost hope in Egypt becoming a good tech hub during my lifetime long ago, but these are other signs to confirm that.

I hope I am wrong.