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Can’t Enter Uni Because of Daddy’s Bad Social Credit – The Blacklist Story That’s Got Weibo Talking

When one bad social credit listing affects the entire family.

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The story of a Chinese student who got admitted to a renowned university and was then denied access because of his father’s bad social credit has got Chinese social media talking.

Getting access to a top university is not easy in China’s fiercely competitive education environment. For one student from Wenzhou, Zhejiang province, the results of his gaokao (national university entrance exams) were so good that he received the happy news that he was accepted into one of these renowned universities in Beijing.

Unfortunately for him, that news was later followed up with an update that he could not be accepted due to his father’s bad social credit standing.

The story, which was widely covered by Chinese state media (including the English-language CGTN), received much attention on Chinese social media this week.

The young man’s father, named only as ‘Mr. Rao’ (饶先生), ended up with a bad credit standing after owing a debt of 200,000 RMB (±US$29,900) to a local bank for more than two years. Since Rao did not succeed in paying off his debt after warnings given, he was informed by a local court that he had ended up on a so-called “lose trust list” or “black list” (失信名单/失信黑名单).

Towards a More Credit-Based Society

In 2014, China’s government first announced plans of its “Social Credit System” (社会信用体系) that focuses on accumulating and integrating information, and will create measures that encourage ‘trustworthy behavior’ and punishes those who are not ‘trustworthy.’

The system is planned to go national by 2020, and is currently implemented in various regions across the country.

However, the public black list was introduced before this time, with Chinese courts in 2013 starting to publicly give out the names online of people who have not complied with court orders.

Additionally, In 2006, the People’s Bank of China (PBOC) also already began operating its own independent Credit Reference Center tasked with managing a national commercial and consumer credit reporting system. With the recent launch of the so-called ‘trust alliance’ (信联), a new unified platform that has access to an enormous number of personal credit data, China’s credit-based society has taken another leap – with state level and commercial organizations joining forces in further developing China’s credit systems.

In recent (English-language) media reports, the lines are often blurred between the Social Credit system and a number of private programs, including the Sesame Credit program. These misunderstandings partly come from the fact that both the government’s plans on introducing their ‘Social Credit System’ (社会信用体系) and the Central Bank’s endeavors to build a stronger personal credit industry (个人征信行业) were major developments in the period from 2013-2015 up to the present. Together with the 2013 judicial online blacklist, these policies and programs all built on a stronger credit-based society that governs both economic and social areas.

The ‘system’ (there is not one system in place yet) works through rewards and punishment mechanisms. In the city of Zhuhai, for example, individuals or companies with good credit are put on a “red list” which potentially means they could be praised online (Zhuhai credit website) or given rewards, whereas those put on the “black list” (f.e. due to serious misbehavior or promise-breaching) will be subject to various restrictions (Zhang & Zhang 2016, 157).

Those restrictions could include a halt on loans or a national ban from traveling by air or train. Since private programs and institutions also have access to the public blacklists, one company or person’s bad credit status can affect their status among various platforms and for various institutions – and thus, potentially, could also influence their children’s access to schools and universities.

A Controversial Measure

The recent story of Rao’s son paying the price for this father’s bad credit listing has stirred controversy online over children being affected by their parents’ bad credit listing.

One Weibo news thread on the issue received nearly 30,000 comments.

One of the most popular remarks on the story said: “If it is okay to treat those who are associated with an offender as guilty (连坐), then it’s time to punish the sons and daughters of corrupt officials, too.”

“A father’s bad credit has nothing to do with the children!”, another Weibo user said.

But another popular comment called the measure “effective,” with others agreeing: “If he waited two years to pay off his debt, he was basically asking to be on the blacklist. That his bad credit influences his child’s education is just to reap what one has sown.”

Various Chinese media, including financial newspaper Caijing, report that the boy’s father was previously warned by the local court that his bad credit standing could potentially have consequences for his children too, but that he still did not comply with court orders to pay back his loans.

Since Rao’s son has been denied access to the university as long as his father has a bad credit standing, Rao has allegedly paid back the loan and has asked the local court to be removed from the blacklist.

There are also commenters on Weibo, such as @闪电McQueen, who say the university’s actions are nothing newsworthy: “This is just the [political] examination of people’s records, it’s not specifically about the black list, it’s common knowledge, let’s not make it all about that black list.”

This commenter’s reaction reiterates the idea that the social credit system and black list system is actually not that new, as Rogier Creemers has previously described in Foreign Policy (2016): “The Chinese Communist Party government has always sought to keep tabs on its citizens, for instance through the “personal file” (dang’an) system of a few decades ago.”

Another person on Weibo says: “The people who are saying the child is the victim here should also know that people who end up on the blacklist are generally not people without money, their kids have enough opportunities, it’s just that if they owe money [to the bank], paying the tuition fee for their kids would become a problem.”

As for Rao’s son, whether or not he will be able to start at his new university in Beijing in the new semester, now that his dad has paid off debts, is yet unclear. Some commenters say it would be better if he didn’t: “Who wants to go to a university who does this anyway?”

UPDATE (7.16.18): Jeremy Daum at the ever-insighful China Law Translate blog has further looked into this case and found that the institution in this article, which has not been named in Chinese media, is most probably a private academy. He was also able to verify that this concerns a real story with no fake names used – he was able track Rao down in the public blacklist.

By Manya Koetse, with contributions from Miranda Barnes

References

Creemers, Rogier; Peter Marris; Samantha Hoffman; Pamela Kyle Crossley. 2016. “What Could China’s ‘Social Credit System’ Mean for its Citizens?” Foreign Policy, Aug 15
http://foreignpolicy.com/2016/08/15/what-could-chinas-social-credit-system-mean-for-its-citizens/ [15.7.18].

Zhang, Keting, and Fang Zhang. 201. “Report on the Construction of the Social Credit System in China’s Special Economic Zones.” In: Yitao Tao and Yiming Yuan (eds), Annual Report on the Development of China’s Special Economic Zones (2016): Blue Book of China’s Special Economic Zones, 153-171. Singapore: Social Science Academic Press.

Spotted a mistake or want to add something? Please let us know in comments below or email us.

©2018 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

Manya Koetse is the founder and editor-in-chief of whatsonweibo.com. She is a writer, public speaker, and researcher (Sinologist, MPhil) on social trends, digital developments, and new media in an ever-changing China, with a focus on Chinese society, pop culture, and gender issues. She shares her love for hotpot on hotpotambassador.com. Contact at manya@whatsonweibo.com, or follow on Twitter.

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5 Comments

5 Comments

  1. Bruce Humes

    July 17, 2018 at 8:51 am

    Good piece! Clarifies where the Social Credit System is going. Sounds like a return to “class struggle” (阶级斗争) in vogue 1949-1978. During that period, children’s place in society was determined by their parents’class, i.e., it was inherited, not based on the child’s behavior. This was known as 出身论, a Marxist concept. Now, in 2018, children’s opportunities for social advancement are determined by their parents’ behavior. This a step backwards for Chinesr society.

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China and Covid19

The Curious Case of the Henan Bank Depositors and the Changing Health QR Codes

“It must be American hackers who did this, right?”, some Weibo commenters wrote in light of the miraculously changing Health Codes.

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Where can people turn to once their money seems to have gone up in flames? How could Health Codes randomly turn from green to red? And who will stand up for justice? These are the questions asked by Chinese netizens in the Henan bank depositors case that is making headlines this week.

This week, the story of a Henan banking scandal and depositors’ Health Codes suddenly turning red triggered online discussions in China and even made international headlines.

In between online deposit products, financial platforms, regional banks, and Health Code systems, the story is a bit messy. Here, we’ll explain the story and its latest developments.

 

DUPED DEPOSITORS

 

The story starts in April of this year when people discovered that they were unable to withdraw money they had invested in online deposit products offered by various smaller regional banks.

Some people had deposited money via the Baidu money app (Du Xiaoman Financial 度小满), others had used another third-party platform, intermediaries, or one of the mini-programs run by the banks themselves.

By early May, it had become clear that dozens of depositors who once thought they had invested their money wisely had actually been duped. Four of the banks involved are located in Henan province, namely: the Yuzhou Xinminsheng Village Bank (禹州新民生村镇银行), Shangcai Huimin County Bank (上蔡惠民村镇银行), Zhecheng Huanghuai Community Bank (柘城黄淮村镇银行), and the Kaifeng New Oriental Country Bank (开封新东方村镇银行).

But there are also other smaller banks involved, including Guzhen Xinhuaihe Rural Bank (固镇新淮河村镇银行) and Yixian Xinhuaihe Rural Bank (黟县新淮河村镇银行) in Anhui.

As reported by South China Morning Post by late May, multiple customers had confirmed that they had not been able to withdraw funds either online or in person.

The sudden apparent closure of their withdrawal channels set off a wave of panic among depositors, who then protested in the provincial capital of Zhengzhou on May 23rd, demanding the return of their money.

Yang Huajun (杨华军), deputy director of the Henan branch of China’s Banking and Insurance Regulatory Commission (CBIRC), arrived at the scene of the protests and – speaking through a megaphone – promised the demonstrators that as long as their funds were “legally” deposited, they would be protected by law.

Many depositers, however, were unsure of whether or not their deposits were actually made in a “legal” way and what the definition of “legal” entailed in this case.

Over the past years, Chinese smaller rural banks have partnered with online platforms, often offering relatively high returns, in order to boost their deposit-reliant funding base.

In December of 2020, platforms Alipay, Du Xiaoman Financial, JD.com and Tencent Wealth Management all suspended the sale of online deposit products via their financial apps in light of heightened scrutiny from regulators concerning funds raised by unstable smaller lenders.

The smaller banks that are now at the center of the recent financial scandal then (illegally) reached out to their existing customers directly after December 2020 and convinced them to download the banks’ apps in order to deposit even more money.

One of the persons duped is Mr. Sun from Shenzhen. As reported by Sina Finance, it was in 2020 when Sun came across a seemingly attractive online saving product via the Du Xiaoman Financial app. Although Sun was not familiar with the banks in question, namely the Yuzhou Xinminsheng Village Bank and Shangcai Huimin County Bank, he could not resist the deposit interest rate of 4.6%, which was much better than what the big banks were offering at the time.

In early 2021, Mr. Sun received a text message from Yuzhou Xinminsheng Village Bank saying that although the financial products had been taken offline, users would still be able to deposit through the bank’s own online application. Mr. Sun ended up depositing his entire savings into the Henan-based rural bank, thousands of miles away from his own home.

And then, earlier this year, Sun came across the news that Henan New Wealth Group, the primary shareholder of all banks involved, was under investigation for fraudulous practices. When he opened up his online financial application, there was nothing to see but a notice that the system was under maintenance. Sun could no longer access his funds. Hundreds of other customers were seeing the same empty screens.

According to media reports, the current suspected scam case affects some 400,000 customers of seven local banks and involves a money sum of 40 billion yuan ($5,6 billion).

 

IN THE RED

 

As thousands of depositors have been fighting to recover their savings over the past two months, they were duped a second time earlier this week. Dozens of affected depositors claimed they had seen their Health Codes turn red without any logical reason on June 13 or June 14 – the day of a planned protest.

In China’s Covid era, the Health Code system has become a pivotal tool in the country’s battle to contain the spread of the virus. The Health Code system is embedded in various apps, most importantly in Wechat and Alipay, and uses various data to assess an individual’s exposure risk. There is not one unified national Health Code application; they are developed by different actors and their management is different across Chinese provinces and cities.

If there is no detected risk, an individual is assigned a Green QR Code and is allowed access into any venue or location where a QR code scan is mandatory. With a Yellow Code, you should stay home for a week, and Red Code means you are high risk and need to quarantine for 14 days – this severely limits your freedom to move around and travel.

On June 13th, many affected investors saw their Health Code turn red when arriving in Zhengzhou, where they were allegedly coming to retrieve their savings and protest the injustice they suffered. The QR code color change was unexpected and strange, considering that there were no new reported Covid cases in their vicinity and also considering the fact that accompanying family members who made the exact same journey did not see their Health Codes change.

This raised suspicions that the duped depositors were specifically targeted, and that their Health Codes were being manipulated by authorities.

CNN reported that many distributors who had come to Zhengzhou were taken to a guarded quarantine hotel before being sent back to their hometowns via train the next day. According to a Chinese media report by Nanfang Daily, the depositors were not even asked to do nucleic acid testing and were told by local staff that they would get their Green Code back as soon as they left Henan.

Various media report that minimally 200 depositors saw their Health Code change from Green to Red earlier this week.

 

“OPERATION CODE RED”

 

The curious case of the Henan depositors scandal and the changing Health Code colors has become a trending topic on Chinese social media this week.

The topic of the duped depositors was also discussed online before this week, and it brought back memories of earlier financial scandals, such as the P2P chaos that occurred back in 2018.

But the topic of depositors’ Health Codes changing to Red is something that attracted much wider discussions on the apparent abuse of a system that has now become a part of everyday life for people in China’s Covid era.

The main proof for people that the Henan depositors were targeted in this apparent “Operation Code Red” is that, as mentioned before, the family members that were traveling together with the duped depositors never saw a change in their Health Code: those people who were listed on the affected regional banks’ depositors list were seemingly singled out and purposely targeted.

“Who is in charge of changing the Health Code colors?” became a much-asked question on Weibo, with many blaming local Henan authorities for abusing their powers to try and stop protesters from raising their voices in Zhengzhou. One Weibo post on this issue received over 1,6 million views. Meanwhile, Henan authorities still said they did “not understand” what had happened.

“It must be American hackers who did this, right?”, some Weibo commenters wrote, putting in a sarcastically smiling emoji, with others adding: “No, the aliens did this – it must have been the aliens!”

Others wrote that the situation at hand should be simple to figure out: “There is no way that this is an oversight or a data error. If you want to know who did this, look at who or which department has the authority to manage both epidemic prevention measures as well as finance affairs.”

Many comments also showed a sense of disillusionment with how China’s Covid management affects the people: “After seeing the chaos during the Shanghai lockdown, this does not even surprise me anymore,” one person wrote on Weibo: “All we can do is pray that it won’t happen to us.”

“Why is Henan’s “messy Red Code” incident so extremely vile and scary? Because once a person or institution holding public power looks at you in a bad light, they can give you a Red Code and take you away, in the name of legality. This is the evil that comes from unmonitored power,” one blogger from Anhui wrote.

Other people also worried about foreign media reporting on this issue, saying this incident is being used to cast China in a bad light while local authorities are to blame: “We should unify the Health Code system into a national system in order to avoid this from happening again.”

According to Chinese state media reports, the case has now been forwarded to the Health Commission of Henan Province for further investigation.

We will keep tracking upcoming developments. Meanwhile, check out our other reports on trending topics relating to China’s banking and finance here. For more about Covid-related trending topics, check here.

By Manya Koetse
With contributions by Miranda Barnes

Image via Weibo

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References (all other sources included in hyperlinks)

Lee, Amanda. 2022. “Rural Banks Freeze Customers’ Accounts.” South China Morning Post, May 31.

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China Digital

From Teacher to Livestreamer: Ecommerce Move is Game Changer for China’s New Oriental Education

New Oriental is going from classroom to e-commerce. Online shopping has never been more educational.

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After laying off 60,000 staff last year, Chinese private education company New Oriental is now offering unexpected new employment opportunities for teachers in the livestream market. Changing e-commerce channels into virtual classrooms, New Oriental has hit the sweet spot with Chinese netizens.

Last year, an unprecedented crackdown on China’s private education sector left many teachers unemployed and worried about their future.

China’s so-called ‘double reduction’ (双减) policy was announced in August of 2021 and targeted “excessive homework” and off-campus tutoring for students in the mandatory nine-year education system. The new regulations imposed strict sanctions on existing private education institutions, forcing them to register as non-profit organizations. Foreign investment in the private tutoring sector was also banned.

One of the companies that was hit particularly hard by this policy is New Oriental (新东方), the largest provider of private educational services in China. Following the crackdown, the company suffered huge losses and dismissed 60,000 employees.

Facing the new regulations, including the ban on for-profit tutoring in subjects on the school curriculum, New Oriental tried to keep its head above water by exploring new markets and ideas within the private education sector. For example, the company launched a special program to train parents on how to tutor their K-12 children themselves. New Oriental called it their “excellent parenting” (优质父母) training class.

Now, nearly a year later, another initiative by New Oriental has become an online hit. Inspired by the success of livestream e-commerce in China, the tutoring company started its own livestream channels. Although New Oriental already introduced its e-commerce business in late 2021, with founder Yu Minhong (俞敏洪) sometimes hosting the sessions himself, it had not been as much of an online success until it recently introduced bilingual livestream e-commerce sessions.

Now, tutors-turned-sellers are teaching viewers English – or sometimes other subjects – while selling (agricultural) products via the Douyin app. Whether they are selling fruit, rice, or even shrimp, New Oriental’s livestream hosts are grabbing every opportunity to teach their viewers a new word or concept, often using a whiteboard to introduce new vocabulary.

Whatever they’re selling, New Oriental’s livestream hosts make sure it’s educational.

One reason for New Oriental becoming a viral hit is because of Dong Yuhui (董宇辉), who is one of the experienced teachers now selling products online. Dong’s bilingual livestreams are particularly successful among viewers because of his enthusiasm, fluency in English, witty jokes, personal stories, and talent for singing.

Teacher Dong recently had a breakthrough moment with his June 10th livestream, during which he sold bags of rice using English. He has since attracted over nine million viewers. While thanking all viewers for their support in a recent Weibo post, Dong described himself as a “ordinary peasant boy.”

Dong Yuhui (董宇辉) is one of the livestreamers that have turned New Oriental’s e-commerce into a viral hit.

Besides Dong, there are also other popular hosts. English teachers Ming Ming, Yoyo, and Dun Dun are all loved by viewers for their charm and wit.

Although various kinds of social e-commerce categories are particularly popular in China, this new phenomenon of combining education + e-commerce + livestream is appreciated by many netizens who like to learn something while being entertained and perhaps also buying something. “I don’t know whether to place an order or to make notes,” has become a popular comment. Another commenter said: “As a kid I took your class, and now I buy your goods.”

Others say that they like the calm way in which the livestreams are presented, posing a stark contrast to other livestreams where the hosts are hyping up products and urging people to buy fast and buy more.

On June 15th, news came out that New Oriental’s stocks had surged by more than 25% following its livestreaming success.

Although some Weibo users predict that this is just a temporary trend, others think that the educational livestream model is here to stay: “New Oriental really started a new business venture, and I’m learning a lot through their livestream sessions.”

By Manya Koetse
With contributions by Miranda Barnes

Image via Weibo

Read related article: China’s Crackdown on Tutoring Schools: Concerned Parents and Teachers on Weibo

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