The evolution of China’s citizen ‘grading’ system

In place since 2014, China’s social credit system (SCS) combines government databases, court records and regulatory lists to reward compliance and penalize violations, with the goal of improving trust in transactions, enforcing existing laws and reducing fraud across sectors.

Theo ORCAthe idea of ​​China’s social credit system emerged from the 1990s to the early 2000s, when high-speed market liberalization exposed shortcomings, especially in law enforcement and credit infrastructure. Fraud, counterfeiting and default erode trust and hinder economic development.

In 2007, China continued to mention the social credit system at government meetings. In 2014, China’s State Council issued the Outline of the 2014-2020 Social Credit System Construction Plan, outlining a framework to create a unified credit information system: establish government credibility, improve business integrity, and raise social ethical standards.

The initiative kicks off the launch of Credit China – a website that monitors and publishes credit scores of businesses and individuals, according to SCMP. By 2016, the system expanded criteria for law compliance, tax payment and social behavior, including publicizing the list of individuals and businesses ruled by the Supreme People’s Court. The People’s Bank of China then estimated that by 2020 there would be more than one billion individuals and 60 million enterprises and organizations covered by the system.

The plan then aims for a unified credit information platform, including a mechanism to reward trustworthy people and punish those who violate the law. Initially, the program will be piloted in selected areas. However, China lacks a national credit law and many ministries still control their own data, so implementation is uneven.

From 2016 to 2024, the country transitioned its fragmented local pilot program to a coordinated national framework. The National Credit Information Sharing Platform (NCISP) becomes a coordination center, linking ministries, provincial databases and management agencies.

On November 14, 2022, China continued to issue a draft law on establishing a social credit system, aiming to systematize the previous experiment on social credit. The same year, the government promulgated a law to build a social credit system, providing a more comprehensive legal framework and mechanism, aiming to establish a solid system for assessing the credit capacity of individuals, businesses and government organizations, focusing on compliance with laws, social norms and codes of conduct.

Theo China Dailyby early 2025, NCISP has collected more than 80.7 billion records, including 180 million businesses. The platform also links provincial-level information portals, which maintain a “red list” of units that comply with regulations and a “black list” of units that violate regulations. The system also connects to the Supreme People’s Court’s list of tax debtors and the tax debt database of the General Department of Taxation to coordinate law enforcement.

Along with that, a separate national credit and financial services platform was launched to support small and medium enterprises. The platform connects verified credit data with financial institutions, allowing businesses to receive loans based on credit compliance history. As of February, the platform had facilitated $5.18 trillion in financing, of which $1.31 trillion were credit loans.

The court also strengthens enforcement of judgments through a list of people who do not comply with the judgment. Individuals, organizations, and businesses on the list are restricted from luxury travel, using high-end services, and purchasing high-value goods until the debt or fine is paid. These measures make legal judgments enforceable almost immediately.

On March 31, China continued to issue guidance on improving SCS to promote high-quality development. The document includes 23 new guidelines aimed at building a unified national market, unifying credit rules, establishing a social credit system, as well as emphasizing the principle of “data provision but not display”, and recommending the use of blockchain technology to ensure traceability, recommending the use of rights within the framework, prohibiting excessive collection of personal data and preventing unauthorized use of data. According to China Briefingthe document marks a key point in SCS’s development since 2014, reflecting the transition from “platform design to comprehensive implementation and international positioning”.

Zhao Zhanling, representative of Beijing Javy law firm, assessed that the system is gradually improving the overall credit capacity of society by applying reward and punishment mechanisms based on credit records.

“To some extent, China’s social credit system is similar to the US credit scoring system, in which credit information is used to determine access to services and opportunities, but China’s system is more comprehensive, at least in theory,” Zhanling told SCMP.

Testing process

In December 2017, the National Development and Reform Commission and the People’s Bank of China selected “model cities” to test SCS. Among them are Hangzhou, Nanjing, Xiamen, Chengdu, Suzhou, Taqian, Chongqing, Huizhou, Wenzhou, Weihai, Weizhang, Yiwu and Rongcheng.

In 2019, some places in China began testing a citizen reputation scoring system, encouraging proper behavior through reward and punishment points. Classifying citizens on a scale from 1 (weak) to 5 (excellent), the system not only evaluates people’s behavior in public places such as running red lights, crossing the street illegally, smoking on the train, but also monitors privacy such as citizens’ shopping habits, friendship networks, time spent on hobbies considered unhealthy such as playing online games, paying electricity and water bills as well as paying taxes.

Theo Southern Metropolis Dailyin Suzhou in 2020, citizens were “granted” 1,000 credit points through the Suzhou Civility Code. The software is responsible for evaluating and ranking the civilized level of city citizens, demonstrated through compliance with the law, participation in social activities, garbage classification and proper behavior. They will be given points if they work well and vice versa. However, the trial ended that year with 5,800 participants.

Previously, in 2019, Nanjing police also applied social credit downgrading to some people who frequently violated traffic laws. However, instead of being judged by scores, they were labeled “unreliable”.

For individual cases, Foreign Policy In July 2018, a Chinese university denied admission to a student because his father had a low social credit score. In Jinan, dog owners get points deducted for walking their dogs without a leash or disturbing public order. A lawyer named Li Xiaolin was also rated “unreliable” after not following a court order since 2015, not being allowed to buy airline tickets or register for a credit card.

According to results published in 2022 by the Mercator Institute for China Studies (MERICS), local SCS trials focus more on building a transparent rules-based system, different from the ranking system used in commercial pilots. Citizens usually start with an initial score, then add or subtract depending on their actions. Some tests also allow citizens to appeal the score they are assigned.

On the business side, since 2015, the People’s Bank of China has licensed eight companies to test social credit systems, including Alibaba’s Sesame Credit, Tencent, car sharing service Didi Chuxing, and online dating Baihe.com. Companies partner with the government to develop the software and algorithms used to calculate credits.

Along with that, commercial pilot programs developed by private corporations are also allowed by the Chinese government. Compared to the state program, citizens can decide to refuse to participate at any time. People with good scores enjoy incentives such as priority credit loans, discounts on car sharing services, fast processing of visa applications, free medical examinations and priority hospital treatment.

In instructions issued in March, China tightened the handling of dishonest acts. Businesses classified as seriously fraudulent will face significant restrictions, including a ban on accessing government funds, tax incentives and issuing securities. Industry blacklists are also expanding, signaling tighter scrutiny in the real estate, internet services, human resources and energy sectors.

Theo China Law Translatethe above experiments show that SCS does not assign a common score to all. Instead, the system operates as a network of databases from various agencies that monitor specific legal or administrative actions, not a centralized scoring platform or state-issued rankings.

“SCS is essentially a collection of administrative databases and sector-specific blacklists, gradually formed over more than a decade, mainly to enforce contracts and combat trade fraud,” researcher Lizzie Lee of the Asia Society Policy Institute told Newsweek. “This system is more akin to a vast management infrastructure, rather than a universal social score system.”

However, Ms. Lee warned that the system could be abused for specific purposes. Local differences also lead to uneven implementation across provinces and sectors.

“Technological limitations are the main obstacle,” Newsweek comment. “Despite the policy call for strong data integration, the infrastructure connecting the credit system across ministries, branches and regions in China is still under development. Recent changes are not a revolution in social control, but a tightening of China’s administrative system.”