I recently wrote a fictional piece at my inactive blog, Musing Under the Tenement Palm, purported to be an American newspaper article written after the Beijing 2008 Olympics. I’ve decided to take another crack at a fictional article from China’s future. This one is more of a stretch than the last one, but I hope it still manages to be entertaining and interesting. All links refer to real-life present examples, mostly in the United States.

Guanxi 2.0 – China’s Data Nightmare
South China Morning Post, October 18, 2010

Zhang San (张三) looks haggard as he walks into the Mingtian Coffee Language Cafe for our interview. “I can’t sleep,” he mutters, knocking back a cup of Nescafe. “I spend every day waiting in line, speaking to receptionists, clerks, minor officials. But all that happens is they refer me to someone else, who I spoke to before who led me to them in the first place. I’m going in circles everyday and meanwhile my life is falling apart.” Mr. Zhang, 33, may lose everything he’s worked for in the next few weeks – he has been blacklisted and ostracized from Chinese society, a non-entity to be shunned. This might carry echoes of the Cultural Revolution when put this way, but this is not political. Mr. Zhang is the victim of mistaken identity, the result of the China’s Data Revolution. “The worst part of it all,” says Zhang, “are the snakeheads who call my mobile phone demanding 50,000 yuan for smuggling my sister to New Zealand.”

“I don’t have a sister!” he nearly shouts, and the waitress refilling our coffee nearly spills it all over the table.

Ten years ago, consumer and personal databases were nearly nonexistent in China. The only place one could find such a database was in the black box of the Chinese governments archives, where the data was overwhelmingly political. Even then, China’s government databases (PDF) were broken into roughly 3000 large scale and medium scale databases strewn across every ministry and department. China’s eGovernment policies have made substantial progress in overhauling much of the system, but huge gaps still exist – not unlike those that plagued the American FBI’s ambitious but failed Trilogy program or the NSA’s Cryptologic Mission Management and Groundbreaker programs. Bureaucracy, of course, is no stranger in China and there is still an enormous amount of material lost, incomplete, rotting in file cabinets, databases unconnected, improperly updated, and more.

“The program was enormous in its scope, and was bound to fall short of expectations,” says Wang Yin (王垠), CEO of Mimi, a data and identity protection firm in Yichang, Hubei province (Yichang has become a center for server farms and data processing as power is readily available from the nearby Three Gorges Dam, similar to Google’s Columbia River Gorge move in 2006). “But even worse has been the insecurity in the system,” says Wang. “The genie is out of the bottle, and making alot of peoples lives miserable.”

A combination of factors are hacking away, in some cases literally, at China’s attempt to build a post-industrial society. Increasingly sophisticated counterfeiters and identity thieves, thriving grey and black markets for consumer data, the inability to prevent foreign data brokers from slow but surely accumulating ever more sophisticated databases, the Chinese governments instinctive need to monopolize data, and perhaps worst of all, the Chinese language itself.

In 2006, the People’s Bank of China had launched over 140,000 terminals across the country for its burgeoning new credit system. The system was woefully incomplete, with fractured bits of data based mostly on loan information. It wasn’t until 2008, when credit cards began to take off in China, that the network began to collect massive amounts of consumer data. But in China, where at least 350 million people share the same five surnames, false positives have led to an enormous number of cases of mistaken identity. The problem was supposed to be avoided, as in other countries, by comparing other information such as national ID number, address and other profile information. But the black market made that problematic.

The Chinese government has never shared its database information willingly. But as Chinese companies needs for more services in marketing and consumer profiling increased, market demand gave rise to a new and often underground industry of data brokers. Like data brokers in the United States and other countries, data is often collected by hand, sold by local officials, and stolen or procured through fraud. These data brokers, in turn, become one of the only sources of data available to the private sector.

The Chinese government offers subscription services to their credit database, and a few others, but Chinese companies routinely supplement it with information from other, often contradictory or outright ficitious material, in an attempt to gain market share. One major source has been the huge data collections of Baidu and Yahoo built with the aid of intrusive spyware that gathers, quite poorly, click and personal data which they then sell to corporate clients. The data has been alleged to be hopeless undependable, but Chinese companies nonetheless take what little they can get in the face of government intractability in sharing its data.

The result has been that records, such as Zhang San’s, have become digital fogs. Even worse, small business owners can’t afford the hefty 100,000 yuan per year subscription service to China’s OneCredit system, and so they can only rely on the smallest and most illegal data brokers: the ban zheng (办è¯?).

The ban zheng have other means of collecting data as well. The Spam Wars actually resulted in the creation of a huge market for mobile phone numbers and related information. Despite the Chinese governments crack down requiring registration with real names and valid ID, the spammers continued to hammer away at phone users. Worst of all, the Chinese government actually enabled the continuation of spamming with the introduction of RFID enabled national ID cards. While software hackers broke the encryption on China’s national IDs, hardware hackers built RFID readers capable of being concealed and reading multiple RFID scans from 30 feet away, all while using a much older technique: paying off cashiers and clerks to copy data. Now, instead of simply trading sheets of numbers, spammers trade more complete profiles that can replicate a national ID as well. And these profiles move back and forth between legitimate and illegitimate business.

One other player in the data pollution sweeping across China are foreign data brokers. Acxiom, a major US data firm, has found itself mired in controversy for its attempts to merge data from other countries, particularly from the United States, on Chinese citizens visiting or residing there. While Acxiom claims it has simply been trying to gain a foothold in the exploding Chinese outbound tourism industry (which has exceeded predictions of 50 million by this year, reaching an projected 63.4 million outbound tourists), it has been pilloried from all sides. The U.S. Congress attempted to pass legislation banning the export of this data to China, arguing it could be used to target Chinese dissidents and others. Chinese consumer advocates, of whom there are now a fair number, argue that the data is hopelessly erroneous as Acxiom’s data confuses Chinese citizens and US citizens with Chinese names. Indeed, one example was the appearance of a Ms. Lisa Loeb, a minor pop star of the 90s, amongst a long list of women named Ms. Li Si (æ?Žå››).