Yangqiao, a community of 1,200, is an unlikely pioneer of the government’s social credit system, first envisioned in the 1990s. Blending Western-style financial credit scores with broader measures, the approach aims to regulate the behaviour of com­panies and individuals. Citizens who conduct themselves in the approved manner can benefit from on-the-spot loans and better job prospects. Those found guilty of infractions can find them­selves blacklisted and denied high-speed train tickets or denounced in public.

China is deploying the apparatus to engineer a society that, as the propaganda puts it, will “allow the trustworthy to roam everywhere under heaven while making it hard for the dis­credited to take a single step”. But is this, as some believe, the beginnings of a digi­tally organised police state in which those who fail to conform find their rights and freedoms severely curtailed?

On a recent Monday afternoon, two officials in Yangqiao’s village hall scurry around trying to start up the computer system that stores the village’s social credit database. Once it flashes on, the touch screen allows users granted access by the government to view records for every villager, displaying information such as annual salary, number of cars owned and size of property – as well as a unique social credit score. In time, the score will incorporate many factors – practising banned spiritual movement Falun Gong, or being late on a loan payment will mean losing five points; visiting elderly parents or taking them to the doctor will earn you six. A household’s star ratings will also have an impact. (It is unclear whether children will be scored; theoretically, those over the age of 13 can be held responsible for criminal actions and could, therefore, be blacklisted.)

Village officials say the system is not designed to assert greater control, but rather to encourage residents to aspire to be better people. The programme, called “morality bank”, reminds people that good­will and moral values are built up over time.

“The main purpose is to guide villagers in a good direction, such as having strong family values and doing good things,” says Jiang Jianzhong, 53, the village chief.

When the programme launched last year, teams of Communist Party inspectors went to each house to issue the star rank­ings now posted outside homes. These are meant to be determined quarterly – although the local government has managed only one round so far.

Among the residents of Yangqiao there is some scepticism. “If you were friends with the people who gave out the stars, you got a higher score,” complains Wang Meifang, 56, a shopkeeper, upset about her two-star rating for overall tidiness. “It’s a shop! It’s difficult to keep the front clean all the time, but there’s no real penalty besides feeling a little embarrassed.”

Farmer Wu Yugen, 58, tore down his rating sign shortly after it was pasted outside his front door. “It’s disgraceful,” he says over lunch, smiling. “When we do good things, we should do them out of our own conscience.”

Others, apparently, aren’t even aware that village authorities are watching them closely. “Oh, I didn’t even notice it until you asked,” says Cui Fuying, 44, a seamstress, who then grumbles at her two-star rating for tidiness, partially papered over with a red banner.

“China is massively expanding the idea of credit beyond ‘Should you get a credit card?’ and moving it into some sort of personal-evaluation system,” says Martin Chorzempa, a research fellow at the Peterson Institute for International Economics, a Washington-based think tank. “It’s potentially a whole new way to govern a country.”

In 2014, China laid out an ambitious blueprint for a nationwide social credit system: across a vast country of 1.4 billion people, it aims, by the end of next year, to have established the parameters to eradicate everything from poor driving to govern­ment corruption.

Its supporters say the system is meant to address the government’s failure to enforce its existing laws and regulations, and it will do so by incentivising good conduct and punishing infractions. Drivers who fail to pay a highway toll can end up on a blacklist, and those who light up in public places where smoking is banned won’t be able to apply for loans. People found guilty in court of various infringe­ments might be banned from booking plane tickets and buying property, or barred from holding senior positions in state-owned firms.

To create this system, the authorities are amassing what could become the world’s largest data set, pulling together informa­tion held by the government and private companies to track behaviour and jointly administer rewards and sanctions. The result would be detailed files that, theo­retic­ally, officials or employers could consult before awarding a government contract or making a job offer. New data-privacy laws coming into effect, however, will have an impact on what information can be shared across government and revealed publicly, though some blacklists with people’s names and national ID numbers are already available online.

Such checks are familiar in mainland China. Under the dangan system, a hang­over from the Mao era, the Communist Party maintains personal dossiers on citi­zens, detailing everything from school grades and work-performance reviews to perceived political leanings.

To keep adding to this vast mountain of data, Chinese companies have aggressively advanced an all-encompassing digital-surveillance network. In a sprawling campus owned by Chinese telecoms giant Huawei, in Shenzhen, a bank of screens shows facial-recognition technology being deployed in mainland cities: as footage of pedestrians plays, faces are circled and an apparently correct name and address given for each individual.

The average Chinese person knows he or she is being watched. Some intersections are now overlooked by large screens, on to which are projected the faces and identify­ing details of any pedestrians crossing when the light is red; fines are then sent via text message. This facial-recognition tech­nology is also linked to some of the coun­try’s 200 million closed-circuit television (CCTV) cameras. More discreetly, the government is known to monitor internet usage, personal communications and travel by plane, train and car.

In a country the size of China, it is expected to take years and a colossal technological and bureaucratic effort for the social credit system to be completely rolled out. Even so, there is no doubt it represents the most ambitious attempt by any government to integrate automated data collection with surveillance tech­nologies in pursuit of social control.

“I think the direction of travel is very scary,” says Professor Steve Tsang, director of the China Institute at the University of London’s School of Oriental and African Studies. “What they are trying to do is to get people to behave better. That sounds pretty unobjectionable – except, who judges it? Your good civic citizenship is not how we would measure it here in [Britain]. It’s whatever the Communist Party says.”

In time, “the government’s objective is to precisely engineer people’s behaviour to ensure the Chinese Communist Party main­tains indefinite control, and it’s straight up from Orwell”, says Maya Wang, a senior China researcher at Human Rights Watch, a New York-based advocacy group.

In the West, services from Airbnb to Amazon have credit systems of their own. With Uber, for instance, the idea is that drivers will be incentivised to provide better service as a low rating could get them booted off. But “sometimes, riders will downrate for things outside the driver’s control, not to mention petty discrimin­atory biases that can get baked into driver ratings”, says Shazeda Ahmed, a social-credit expert at the University of California, Berkeley. These services thus provide some insight into the challenges that China’s social credit system faces. With rankings, “it’s unclear how meaningful they are and which data they assess”, says Ahmed.

“My case was a mess,” Liu says. “The Chinese government is trying to set up a ‘credible society’ through the social security system, but how can it be possible if the government is not honest?”

Li Xiaolin, a lawyer, also fell foul of the system. In 2011, he defended someone accused of rape, and gave a copy of his defence state­ment to the man’s family. Without his knowledge, the family posted it online; the alleged female victim then sued Li for defamation and won. As ordered by the court, Li sent a written apology to the woman in 2015.

A year later, he found he was forbidden to buy a plane ticket. The court had included him on a list of “untrustworthy” people, because it found his statement “insincere”, one of the reasons being that it had been dated April 1, April Fool’s Day. Although Li was upset that he had not been notified of the fact his state­ment had been deemed insincere and his subsequent blacklisting, he drafted another apology, and this one got him removed from the blacklist.

“I am an innocent victim of the system, and the court was wrong to blacklist me,” Li says. Interestingly, though, he is in favour of the social credit system. “I think it is necessary. If a person is not honest and doesn’t comply with laws and regulations, it is reasonable to blacklist them.”

Travel bans are not uncommon. Government propaganda has crowed that transgressors were blocked from buying plane tickets 17.5 million times last year. Others were barred 5.5 million times from purchasing train tickets, and 128 people were prevented from leaving China due to unpaid taxes.

But officials have yet to offer hard evidence as to whether the social credit system is improving their ability to govern. According to some commentators, the mere spectre of being tracked more closely by the authorities might be enough to encourage acceptable behaviour.

As Chorzempa explains it, “People can go around screwing other people over and over again, and not face the consequences. The existence of these [trust] issues is to a great extent because of mistakes the Communist Party has made in the past.” And in the era of big data and artificial intelligence, the government has settled, he says, on “a technocrat solution: ‘We’re going to use technology to solve the human trust problem.’”

Back in Yangqiao, meanwhile, it seems the people are controlling the social credit system, rather than the other way round. Along the main strip, Cui Dongliang, 67, a tea-shop owner, has upgraded himself overnight to five stars using red star stick­ers he bought the day before. According to Chen Zhengqing, 48, the Communist Party secretary for the county, this is, in fact, a positive sign. “I was kind of happy to see it, because it meant he felt ashamed for having fewer stars – he cared.”

Officials chose not to punish Cui, and instead offered him a chance to mend his ways. “After all, this programme is meant to boost villagers’ morality, not punish them,” Chen says.

Despite several public bulletin boards detailing the morality bank programme, residents we speak to know little about how it worked. Though some have noticed less rubbish on the streets, none has stopped by the village hall to check their own or their neighbours’ scores.

About 145km away, Hangzhou, the capital of Zhejiang, launched a new credit system last November. Dubbed “Qianjiang Fen”, it is named for the river that winds through the city to the East China Sea.

Though scoring criteria are a work in progress, those with higher ratings can already get on-the-spot loans to pay hospital bills, put down lower deposits when renting flats and use school-gym facilities free of charge. Lower scores reduce access to various services: citizens can be barred from a “ride first, pay later” public transport programme and forced to pay higher deposits to rent a bike, though they can mitigate a poor rating by donating blood or volunteering.

Hangzhou’s social credit system is directly linked to a smart ID card, which residents obtain at municipal offices. It combines a number of functions, including paying for public transport, accessing social-security funds, debit-card payments and library borrowing privileges. Those who want to take it one step further can download a mobile app and check their social credit scores. So far, fewer than 500,000 people in this city of 9 million have looked up those numbers.

No Hangzhou residents interviewed for this article are aware of the city’s credit system. Nonetheless, they support the idea, especially as it could mean better consumer protection (the app displays blacklisted companies). And most are happy to trust the government – rather than private firms – with their personal data.

“I would definitely choose companies that are on the red list [for good behaviour] over the blacklist, even if the price is high­er,” says Zhou Jian, 36, an interior designer. The whole programme “is a good thing for people who are credible. For people who have lost their credibility, it is reasonable to blacklist them.”

Yangqiao and Hangzhou are leading the way as China attempts to co-opt its entire population into a social credit system. Yet many experts, both in China and the West, are sceptical about the concept of a univer­sal score capable of determining a citizen’s fortunes, believing it would be difficult to implement technically, and would struggle to work politically. Regardless, the infra­structure continues to grow. It is predicted that there will be nearly 300 million surveillance cameras installed by the end of next year, and China spends about US$200 billion annually on domestic security, researchers estimate. But for now, it seems the social credit programme is not having much effect on daily life.

In Yangqiao, farmer Wu Yugen thinks it hasn’t altered – or helped – the village. Many residents here – offering snacks of oranges and warmly inviting us into their homes – say they didn’t need an official scheme to remind them to be better neighbours.

Gambling (which is illegal, except for lotteries and licensed betting at govern­ment-sanctioned venues) also hasn’t gone away – there are at least two mahjong parlours operating in broad day­light just a few doors down from the village chief’s house.

“They give small incentives like free soap to people who report and do ‘good’ things, but who is short of soap?” asks Wu. “Seriously, it’s a joke that a few officials can decide if you are ‘moral’ or not … They can boast about it however they like; people here just carry on living their lives.’

Additional reporting by Robin Pagnamenta and Paula Jin.

Text: Telegraph Media Group Ltd