The Frog in the Pot: China’s Grand Digital Experiment

At the Center of the Fastest Change in the World

Shall I tell you an old story? There was a frog living in a very large pot. At first, the water temperature was just right. But someone slowly started heating the pot from underneath, so gradually that the frog didn’t notice. The frog enjoyed swimming in the warming water, feeling comfortable, but eventually realized too late that it was being boiled alive.

The digitalization happening in China today closely resembles this story. People enjoy the rapidly changing world in the warm water of convenience, but beneath this change, a new order is growing that we never imagined. Today, let’s share the story of this huge pot — the intense digital experiment taking place inside the country called China.

The Invisible Conductor: Digitalization of Politics

The All-Seeing Eye: The Social Credit System

Imagine a day in the life of Mr. Wang living in China. He wakes up, reads the news on his smartphone, passes through a facial recognition gate on the subway, pays for lunch with a QR code, and receives an online shopping delivery in the evening. What if every single one of these actions is quietly recorded and accumulated on an invisible scoreboard called the ‘social credit score’?

The Nation’s Report Card: How the Social Credit System Works

Since 2014, under the goal of creating a “trustworthy society,” the Chinese government has been building this massive system that essentially grades every citizen and company. Government agencies, financial institutions, and internet companies pool personal data to assign scores, rewarding or punishing accordingly.

• Where does the data come from?: Data collection covers almost everything — financial transaction records, traffic violations, utility payments, court rulings, even online shopping lists and social media activity. Simply being caught jaywalking on CCTV can lower your score.
• Rewards and penalties: Responsible behaviors like timely loan repayments, volunteering, and blood donations earn bonus points. Conversely, borrowing money without repayment, breaking traffic laws, causing disturbances in public, or spreading information deemed “harmful” by the government online result in deductions.

Two Faces: The “Red List” and the “Black List”

The scores divide people’s lives into extremes.

• The angelic face: privileges of the ‘Red List’ (红名单): Those with high scores enjoy VIP treatment everywhere. They get low-interest loans easily, priority in hospital appointments and public services, deposit waivers when renting bikes, and even advantages in finding good spouses.
• The devil’s face: shackles of the ‘Black List’ (黑名单): Those with low scores face severe restrictions. They are banned from buying high-speed rail or plane tickets, lose freedom of movement, find it difficult to get good jobs or enroll children in good schools. In some areas, their identities are publicly disclosed, stigmatizing them as “credit defaulters.”

This is China’s “social credit system.” Initially started to assess financial trustworthiness, it now evaluates traffic violations, bad manners in public, and even online comments. High scores make loan approvals easier and hospital reservations more convenient, rewarding “good citizens.” Low scores block plane ticket purchases and hinder children’s school admissions, imposing social penalties.

The government claims this system enhances social trust and maintains order. Indeed, tax evasion has decreased and credit default rates have dropped. However, the fact that every action is monitored and can restrict one’s life without their knowledge reminds many of a “digital Big Brother.” Critics say it feels like George Orwell’s novel 1984 becoming reality.

A Smart Government, But…

China’s digitalization deeply penetrates government administrative services. Instead of carrying complicated paperwork to government offices, Chinese citizens now handle most requests through a single smartphone app. The “digital government” maximizes administrative efficiency and reduces bureaucratic corruption.

But behind this smart government lies a massive surveillance network called “Skynet (天网)” and the “Sharp Eyes Project (雪亮工程).” Hundreds of millions of CCTV cameras equipped with facial recognition monitor every corner of cities and rural areas in real time, tracking criminals and maintaining social stability. While crime prevention is a positive aspect, the state’s ability to scrutinize citizens’ every move raises many questions from a democratic perspective.

Changing the Landscape of Life: Digitalization of Society

A Wallet-Free Society: One Smartphone Is Enough!

Have you ever traveled to China? You probably noticed even street vendors accepting payment by scanning a QR code on a smartphone instead of cash. China has become the world’s largest mobile payment market. Alipay and WeChat Pay have evolved beyond simple payment methods into “life platforms” enabling bill payments, hospital appointments, and investments.

This transformation has made life remarkably convenient. No more heavy wallets, and all financial transactions are transparently managed. However, not everyone enjoys this convenience. The elderly unfamiliar with smartphones and impoverished groups with limited access to digital devices face a “digital divide,” being left behind in this massive wave.

Experimenting with Future Cities: Smart Cities

The Chinese government is investing heavily in building “smart cities” by leveraging AI, 5G, and the Internet of Things (IoT). In smart cities, AI analyzes traffic flow in real time to control signals, drones deliver goods, and remote medical systems monitor patients’ health. Megacities like Shanghai, Beijing, and Shenzhen are gradually adopting these futuristic urban features.

However, the advanced infrastructure of smart cities also means denser surveillance networks. As all city data is centralized and analyzed, the risk of privacy invasion grows. It’s a delicate balance between the ideal of a convenient, safe city and the reality of a fully controlled society.

The Awakened Dragon: Digitalization of the Economy

The Giant Swallowing the World: E-commerce and the Digital Economy

Have you heard of “Singles’ Day (光棍节)”? Originally November 11th was “Singles’ Day,” but now it’s the world’s largest online shopping festival led by Alibaba. The transaction volume in just one day is staggering, symbolizing China’s explosive digital economic growth.

By 2023, China’s digital economy reached about 54 trillion yuan (approximately 1,000 trillion KRW), accounting for over 40% of GDP. This growth reflects not only active online shopping but also the rapid digitalization of traditional agriculture, manufacturing, and services. Big data analytics predict crop yields, factory robots connected to smartphones boost production efficiency, transforming the entire industrial landscape.

A New Currency Challenging the Dollar: The Digital Yuan

One of China’s major recent focuses is the introduction of the “digital yuan (e-CNY).” The digital yuan is a legal digital currency issued directly by the People’s Bank of China. Unlike Alipay or WeChat Pay, which are payment platforms run by private companies, the digital yuan is “money” itself with the same value as cash.

The government says the digital yuan increases transaction transparency and helps prevent financial crimes like money laundering. It is also a key tool in the “de-dollarization” strategy to expand the yuan’s influence in the international financial market.

However, all transaction records remain with the central bank, meaning individuals’ economic activities can be fully monitored by the state. Combined with the social credit system, this raises concerns about even stronger control over individuals.

The Awakened AI Dragon: Big Data and the Rise of AI

The most powerful and frightening product of China’s grand digital experiment is artificial intelligence (AI). Like a sleeping dragon awakening and breathing fire, China’s AI technology is astonishing the world with rapid growth.

Infinite Fuel: Big Data and National Will

Just as a great chef needs fresh and abundant ingredients to create the best dishes, excellent AI requires vast amounts of data. Here, China holds an overwhelming advantage no other country can match.

• A sea of data from 1.4 billion people: Over 1.4 billion people make payments, search, and watch videos daily on smartphones, generating unimaginable volumes of data. This data serves as infinite “fuel” for training Chinese AI.
• A state-led data highway: Unlike Western countries that impose strict rules on data collection and use for privacy protection (e.g., GDPR), the Chinese government prioritizes AI development as a national mission and actively encourages data utilization. This creates a fast lane for companies to develop AI technologies. While criticized for weakening personal privacy, the speed of AI advancement is remarkable.

As a result, China has achieved world-class technology in facial and voice recognition and produced numerous AI unicorns (startups valued over 1 trillion KRW), establishing itself as an AI powerhouse.

New Rules of Future Warfare: “Intelligentized Warfare”

China’s real reason for investing heavily in AI is not just economic gain. Beyond that lies a grand ambition to dominate future warfare. The Chinese military envisions the future war as “Intelligentized Warfare (智能化战争).”

This represents a new paradigm beyond mechanization and informatization, where AI determines the outcome of war.

• The rise of AI commanders: While human commanders analyze vast information and make decisions, AI commanders instantly analyze all battlefield data in real time, suggesting optimal attack routes and strategies. They gain a “decision-making advantage” beyond human speed.
• Drone swarms attacking like a hive: Thousands or tens of thousands of AI-controlled drones swarm from air, sea, and land to overwhelm enemy defenses in “drone swarm” attacks.
• Invisible battlefields: AI plays a key role in cyberspace and electronic warfare, disabling enemy communications, spreading disinformation to sow chaos, acting as an unseen weapon in silent wars.

China aims to surpass the U.S. in this “intelligentized warfare” by leveraging its data advantage and state-driven development capabilities. This could mark the start of a massive shift that changes the very concept of war beyond a new arms race.

Light and Shadow: Two Sides of the Coin

Now, we have toured China’s massive digital laboratory together. Let’s conclude by comparing the light and shadow this experiment has brought.

China’s digitalization is an unprecedented massive social experiment in human history. Whether the outcome will be a convenient, efficient utopia or a fully controlled dystopia remains uncertain. What is clear is that the water in the pot is getting hotter, and the waves of change will not remain confined to China alone. This is why we must continue to watch this grand experiment closely.