The social credit system is likely to track social media activity, career movement, online purchases, financial and criminal records and translate them into a personal credit score, according to BBC News and News.com.au.
A person’s social network is also crucial to determining their credit score, as having friends with a low rating will bring one’s own mark down.
A person with a low score may be deemed “untrustworthy”, and the consequences could include difficulties in getting loans, hotel rooms or even the denial of the right to travel abroad.
The system is in its pilot phase, with eight private companies commissioned to set up their own credit databases.
Other private companies involved include internet giant Tencent, and Qianhai Zhengxin, owned by China’s biggest insurance and financial group, Ping An Insurance.
The system is expected to cover every Chinese citizen by 2020.