My understanding is that the Chinese government is implementing this system because there has been a great breakdown in social norms of honesty and rule-followi

My understanding is that the Chinese government is implementing this system because there has been a great breakdown in social norms of honesty and rule-following. For thousands of years the Chinese operated under an elaborate set of social norms from Confucianism. But then these were thrown away under Communism, and in particular during the Cultural Revolution period there was paranoid chaos, and a great loss of social trust. And then a further radical change with the capitalist industrial revolution under Deng Jiaoping. The consequence is that people don't trust anyone outside their immediate circles, and often feel no obligation to act in a non-harmful way toward them. The Government is trying to restore a sense of moral obligation to the members of the population. It will be interesting to see how well it goes.