More than half of China’s retail transactions projected to be done online this year, but the attendant politicization of data presents a worrying trend

China is projected this year to become the first country where online retail sales outstrip those made in physical shops, with 52.1 percent of China’s overall retail transactions expected to come from e-commerce platforms. The second and third nearest two countries, South Korea and the USA, are expected by comparison to see only 28.9 and 15 percent of their retail sales being conducted online this year.

While the Pandemic has undoubtedly helped boost these figures astronomically, as online shopping takes precedence for consumers particularly with China suffering from further Covid-19 outbreaks as recently as last month, this is a trend that has been consistently growing for some time. In 2019 online retail sales grew by 16.5 percent compared to the previous year, while physical supermarkets were the fastest growing brick-and-mortar sector at 6.5 percent.

While post-Covid, it is unlikely online sales will return their projected heights, it is likely the pandemic will have permanently impacted consumer behaviour to some extent, in the same way the financial crisis of 2008 shifted long-term spending habits. This is thus a significant signal for non-luxury brick-and-mortar ventures inside and outside China to take heed and establish or invest now in their online presence as Covid-19 accelerates a permanent shift in consumer behaviour towards online shopping.

This news will however increase concern among data privacy campaigners. China’s several Social Credit System initiatives all rely significantly on the collection of online data. The increased trend towards online retail equates to a greater wealth of data available for the compiling of citizens profiles used to judge their behaviour in regard to being ‘positive’ contributors towards the state. The Chinese government argues the system is an attempt to “improve the integrity” of society through a system of social and economic rewards and punishments based upon individual behaviour. Critics though point out that the ruling Chinese Communist Party uses the system for “social management” as a means of controlling society and expanding and solidifying its control.

Citizens who criticize state actions, or even spend ‘frivolously’ can find their score lowered. This activates degrees of punishment for the person in question, such as making it harder to get a job, limiting access to financial aid like mortgages, or even making it more difficult for other family members to get into higher education. 26 million Chinese citizens in 2019 as a result of this system were prevented from buying airline tickets due to their “dishonesty”. As Chinese and global society shifts further online, the politicization of personal data will become a much more prominent issue.