China plans to roll out a comprehensive credit rating system - detailing the 'trustworthiness' of its 1.3 billion citizens - by 2020.

Based on data pulled from a raft of online and government sources, the Social Credit Rating system will essentially allow Beijing to sculpt its population’s behaviour using a set of rewards and punishments. If you comply you could be in the fast lane at the airport, or renting an apartment deposit-free. Refuse, and you’ll be made to feel like a second-class citizen.

While more and more Chinese consumers embrace technologies which allow them to go cash-free, purchase goods, and run errands via their smartphone, the government has an increasing amount of access to masses of personal information which it can use to observe and obstruct behaviour.

So far, eight companies and over 30 municipalities have been given the green light for pilot testing of social credit systems. Beijing believes that once firmly in place the system will improve society as a whole, addressing problems ranging from food security to lack of access to financial services. But critics say it will make George Orwell’s fictional Big Brother state a reality; bad for China, and bad for the world.

Either way, the Social Credit Rating system will fundamentally transform China. Here’s what you should know:

INCENTIVISING GOOD BEHAVIOUR

Some may baulk at the thought of voluntarily participating in a rating system, but the everyday perks for so-called “trustworthy” behaviour in the current models are difficult to resist.

Sesame Credit (or Zhima credit in Mandarin) is a public tool run by Ant Financial, an affiliate company of online shopping giant Alibaba. It currently determines a user’s credit score based on complex indicators such as shopping behaviour and ability to pay off debts.

A high rating gets you an expedited security check at the airport, and the ability to try home-delivered purchases at home before paying for them. It also means deposits for renting share-bikes and hotel rooms are waived.

SBS News

But not all measured behaviours are strictly to do with handling money. In one local government pilot, users who recycled their rubbish well were given better access to bank loans.

“The social credit system is meant to perform as the world’s biggest system of carrot and stick to help the Chinese economy as well as Chinese society in the way the Communist Party believes is best,” Bloomberg China Technology correspondent David Ramli tells SBS News.

NAMING AND SHAMING

Just as good users are rewarded, those with a low score - or seen to be disobedient in some way - are punished and shamed. Some pilot cities are using facial recognition technology to track jaywalkers, with the loss of rating points just one consequence of the offence. In the city of Taishan, pictures of the jaywalkers are also shown on video billboards.

MORE READING China's smart city plan to boost surveillance

Meanwhile, the municipality Zhengzhou has offered a unique way to deal with debtors; when a call is made to their phone, a “shaming announcement” will be heard by those who dialled.

More severe punishments include curtailing travel and denying job applications to government offices or children access to private schools. According to a report by the Mercator Institute for China Studies “these punishments offer unprecedented possibilities to surveil and steer the behaviour.”

ADDRESSING A 'TRUST DEFICIT'

One of the main goals of the Social Credit Rating system is to give individuals outside the traditional banking system (students, farmers etc.) access to financial credit. The government sees the all-encompassing nature of the system as a way to ‘even out the playing field’ by promoting equal participation in a consumer society and assessing all citizens according to the same moral code.

Mark Natkin of China-based consultancy Marbridge Consulting says:

“One of the objectives is regulatory, to incentivise behaviour and improve accountability. The other is to streamline various processes and make them more secure, particularly for consumers. In a country as large and complex as China, there’s a real value in having a framework which supplements the legal system.”

BIG DATA OR BIG BROTHER?

Rights groups and dissidents say China’s proposed system will simply enhance its ability to silence opposing voices and trample on human rights. Writer and critic of Chinese censorship Murong Xuecun says it heralds a “dangerous” and “dark” time for Chinese society.

“This system can eliminate a person's ability to survive without putting them in prison,” he says. “Facial recognition technology means there's nowhere to hide. Maybe you won’t be allowed to drive or rent a house. It may involve your kids and their education etc. It’s inescapable. By using this system the government's power will grow to an extent that it never has before.”

Facial recognition technology means there's nowhere to hide - Murong Xuecun, Writer

BEWARE THE BLACKLIST

While millions fly across the country to celebrate Lunar New Year this February, journalist Liu Hu won’t be among them. According to Human Rights Watch the journalist was accused of “spreading rumour and defamation”. Early last year he realised that he was blacklisted, described as “unqualified” to purchase plane tickets. There are reportedly more than seven million people currently on government blacklists, with few options for reversing their “untrustworthy” label.

“There’s a question of who decides what goes in your profile, and what recourse you have if you feel there’s information that was unfairly included,” said consultant Mr Natkin.

2020 ROLL-OUT?

The Chinese government wants participation in the Social Credit System to be mandatory by 2020, but tech journalist Mr Ramli expects formal implementation to be done in stages, rather than with the announcement of one final product.

“In many ways these pilots are a genuine experiment to see how much people will bear and how effective certain measures are. This technology is scaling in terms of its efficacy and reliability. We have iterations,” he said.

If we do see a national social credit rating system appear in under three years, he said, it’s likely to be imperfect.

“Technically the Chinese government could implement a system using incomplete records and data. Will that system be exactly what the Chinese government wants? Maybe not, but something is coming one way or another.”