How China Is Changing Its Social Credit System

By Micah McCartney

China News Reporter

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The new guidance clarifies enforcement mechanisms, standardizes data use, and tightens legal boundaries for credit penalties.

First introduced through pilot programs in the early 2010s, the social credit system was developed as a governance framework to encourage legal and commercial compliance across government, business, and civil society.

China’s much-maligned (but widely misunderstood) social credit system underwent its most recent update in March 2025 with the publication of a 23-point policy directive by the Communist Party leadership.

Over time, it has evolved into a wide-ranging infrastructure involving public databases, industry-specific blacklists, and administrative scoring tools. While often portrayed abroad as a unified, Orwellian surveillance program, Chinese officials and many experts describe it as a fragmented, largely bureaucratic effort to strengthen contract enforcement and public trust.

Standardization

The March 2025 policy did not mark the beginning of the system but standardized its scope. A key focus was ensuring that penalties for “untrustworthy” behavior are grounded in law, administrative regulation, or officially approved state policy.

While such requirements were outlined in earlier documents, the 2025 directive codifies them more rigorously across all sectors.

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The guidance also mandates the creation of a unified national system for public disclosures, designating Credit China as the sole platform for publishing public credit information. Government departments are barred from sharing data outside their jurisdiction, and unauthorized third-party use of public credit data is explicitly prohibited.

For entities placed on “serious discredited” lists, the policy introduces structured channels for credit repair. Agencies must provide clear procedures for removal once compliance is restored, and related penalties—such as exclusion from government funding or public contracts—must be lifted accordingly.

The list of entities covered under the system has also expanded, calling for stronger credit supervision in the platform economy and for occupational groups such as those in law, education, and healthcare.

“Credibility is the bedrock of market-oriented economic activity,” Chinese state-run outlet the Global Times cited Peking University professor Cao Heping as saying. “A strengthened credit system can significantly help entities to identify economic wrongdoing and prevent entities from engaging in misconduct.”

More Regulatory Patchwork Than Dystopian

While some observers continue to view the system as a vehicle for surveillance, experts say the reality is more complex.

“The popular idea of a single, all-knowing big brother score that tracks every citizen’s behavior isn’t accurate,” Lizzie Lee, a Fellow on Chinese Economy at the Asia Society Policy Institute’s Center for China Analysis, told Newsweek. “What China calls the social credit system is really a patchwork of administrative databases and sector-specific blacklists that have slowly evolved over the past decade mostly aimed at contract enforcement and commercial fraud. It’s closer to a sprawling regulatory infrastructure than a universal social score."

Lee called the 2025 changes "mostly technocratic—standardizing credit records for companies, rating government agencies, tightening data rules, and creating ‘seriously discredited entities’ lists in sensitive sectors like real estate, finance, and the internet.”

Still, she warned that the system has the potential to be misused. “Some of the tools, like stronger punishments for entities on discredited lists, have legitimate privacy concerns and absolutely can be used to target individuals or businesses for political reasons,” she said. “But in reality, implementation will remain slow because it requires coordination across dozens of ministries and massive data-sharing that China hasn’t yet figured out how to do cleanly—but is quickly advancing.”

Implementation Still Underway

Despite the formal rollout in March, not all provisions are fully in place. A long-awaited social credit law, intended to provide a legal foundation for the entire system, has not yet passed and remains under legislative review. Local variations continue, and uneven enforcement across provinces and sectors persists.

Technological limitations remain a key bottleneck. While the policy calls for greater data integration, the infrastructure to connect credit systems across ministries, industries, and regions is still being developed. Ultimately, the latest revisions represent another stage in what has become a long-term regulatory project—less a revolution in social control than a tightening of China’s administrative governance systems.

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