Over the last few years, international spotlight has been increasingly placed on China's social credit system, which was announced in 2014 to be put in place by 2020. The mainstream Western media's portrayal of China's social credit system can be summarized as “when big brother meets big data.” Particularly, the system is widely reported as an all-encompassing and all-powerful combination of a surveillance machinery, a rating mechanism and a moralizing apparatus.

It was suggested that under the system the Chinese state will constantly monitor, evaluate and ultimately control the daily lives of millions of ordinary citizens: if you play music too loud in your bedroom or if you are caught jaywalking on the streets, you would be identified (by ubiquitous surveillance technology), recorded (with your social credit points deducted and ranking downgraded) and punished (through the public naming and shaming blacklisting mechanism and all kinds of disciplinary measures).

Indeed, that is a very daunting prospect, verging on, if not already reaching the state of George Orwell's 1984 or the more recent TV drama Black Mirror (specifically ‎Episode 1 of Season 3). However, and fortunately, the reality is much more complicated than that. A handful of observers outside China have rightly pointed out that the Chinese social credit system is not what many believe it to be. In an earlier op-ed, I also argued that the system is not a sinister and pernicious attempt to tighten the state control.

But what exactly is the social credit system? For a quick start, it is best understood through its intention, institution and implementation, touching on the questions of why, what and how.

First, as Jamie Horsley correctly suggested, the motivation behind the system is to strengthen compliance with legally prescribed social and economic obligations and performing contractual commitments, in order to improve governance and market order in a country still beset by rampant fraud and corruption in both the public and private sectors.

This is why the social credit system has a much broader connotation than what is typically entailed in economic or financial credit. As a matter of fact, the Chinese word "xinyong" is better translated not as credit but trustworthiness or integrity. The social credit system therefore aims to enhance generally trust in government, business, society and judiciary in China via regulatory innovation.

What then is innovative about the system? While it incorporates previous reform initiatives such as administrative and judicial transparency, its distinctive feature lies in that it is designed to better detect and deter widespread “untrustworthy” behaviors by public and private actors.

For instance, China has long faced tremendous challenges in implementing its own market regulations. Production safety accidents, food and drug safety crises, tax evasion and products counterfeiting are daily fodder for the news.

Another long-standing problem is the non-enforcement of court judgments against both market players and local governments. The list goes on and on. The social credit system sets to alleviate these difficulties with a very simple and straightforward logic: one needs to be held accountable for one's action. Rules without real consequences are bound to be toothless.

Against such a background, the social credit system requires government agencies to collect, compile, share among themselves and open to the public data concerning compliance with laws, regulations and court orders by individuals, companies and governments.

Based on that data, the social credit system further generates actionable insights for government agencies and market players to respond with either rewards or punishments (called the red lists and blacklists). Under the system, therefore, those who violate laws and regulations or disobey judicial judgments will be identified, recorded, publicized and ultimately punished by the government. This constitutes a massive incentive restructuring, which is only made possible by the big data world we now live in.

Yet, even with quite advanced and still advancing technology, in a vast country with an enormous bureaucracy like China, to establish and operate a social credit system as comprehensive and systematic as just described remains a demanding task.

Collecting, compiling, sharing, publicizing, analyzing and acting upon such an unprecedented amount of credit-related data surely require much more than technology. The necessary infrastructure-building, if successful, involves organizational, legal and societal changes that are large in scale and complex in nature.

For instance, for the social credit system to be effective, prevalent information silos across sectoral and geographical boundaries have to be opened and connected. To deal with the procedural and substantive justice issues raised, new laws need to be promulgated and existing ones revised.

And perhaps most importantly, the Chinese society as a whole will have to adapt to the language of social credit and accept it, at least to some extent, as the new normal.

All of this is not tinkering around the edges but bold transformation. Unsurprisingly, to pull this off, in line with prior practice, the Chinese authority has chosen the tested and proven method of central planning plus sectoral and local experiments.

In addition to the 2014 national policy document, there are now hundreds of departmental and local rules and memoranda to flesh out the system. Five years on, many details remain to be hammered out.

Overall, China's social credit system constitutes a regulatory innovation that aims to enhance compliance with laws and regulations. It is a complex system centrally envisioned but still unfolding at the sectoral and local level. The ultimate goal is not to strengthen state control but to boost social trust in China.

While it is surely debatable to what extent this ambitious endeavor will succeed in the end and it is definitely necessary to be vigilant about any possible misstep or transgression as the system rolls out, the most crucial starting point is to see it as what it actually is.