In a backdrop of continued economic downturn in China, officials persist in singing the so-called “theory of brightness,” while the number of debtors in China continues to grow.
In 2025, the number of individuals on the blacklist for credit default in China reached 8.5 million. This was a significant increase from 5.7 million in 2020, marking nearly a 50% surge in just five years. When a person cannot repay their debts, their entire family suffers.
Public data shows that once a Chinese citizen is listed as an untrustworthy person, the court will issue orders limiting high consumption activities, including using transportation, accommodation, entertainment, education, insurance, and financial management. It restricts loans, financing, credit cards, online shopping platforms, and may prevent them from serving as legal representatives, directors, supervisors, or senior management personnel in enterprises, as well as limitations on traveling abroad.
What is the situation like for these untrustworthy individuals in China? How do they live their daily lives?
A debtor from Guizhou named Yang Gang (pseudonym) told Epoch Times that he worked in renovation in 2020, partnered with friends in 2021 to open a bar and club for renovation. After facing inspection from the fire department for not having obtained the necessary permits, they had to shut down for a while, then reopened. However, due to the simultaneous impact of the pandemic, with stop-and-go operations, they eventually went bankrupt by the end of 2023.
During the bar operations, conflicts arose between Yang Gang and his partners. After they dissolved the partnership, he borrowed money from the bank in his own name, accumulating a total debt of 5.9 million yuan. Although the loans were taken under others’ names, as he was the one leading the way, the creditors came after him. “I was even sued for unpaid wages to employees, and the final restriction on high consumption was filed by the security company I hired.”
Yang Gang mentioned that because he had connections in various circles and managed to handle some relationships, the bank did not aggressively pursue his debts. They would sometimes just call to inquire and occasionally invite him for a chat. However, most of the time, they would let things go citing reasons like “unable to locate the person.”
He stated that he received debt collection calls, advertisements demanding debt repayment, and even threats. Despite various pressures, the lack of funds made it impossible to repay the debts. He pointed out that individual creditors were the most persistent in chasing after him.
He revealed that after accruing debts, friends were hesitant to interact with him out of fear that he might ask for money.
To evade debts and look for a fresh start, Yang Gang moved to Yiwu this year. He had considered developing in Hangzhou previously, but with the nationwide economic downturn, every place seemed alike, except for Yiwu having a relatively stable cash flow. He now works on a daily payment basis in Yiwu, renting a house for 800 yuan a month, earning two to three thousand yuan a month. His aim is not just to repay the debts but to sustain his livelihood. He highlighted the challenge of finding profitable projects to make money to repay the debts in the current difficult situation.
He emphasized the importance of adjusting his mindset, persevering to survive, and planning how to repay the debts. “Many people with debts like me are trying to seize the opportunity in Yiwu to turn things around.”
A 39-year-old entrepreneur from Guangdong named Long Fei (pseudonym) started his business over a decade ago, with company assets momentarily exceeding six to seven million yuan. However, post-2019, during the COVID-19 lockdowns, the company collapsed overnight, leaving him burdened with debts.
Long Fei faced repercussions for being untrustworthy, with restrictions on high consumption, and was involved in one or two lawsuits, including overdue bank debts. “I owe the bank around two million, around four to five hundred thousand in usury loans, and over six hundred thousand to private lenders,” he stated.
On June 14th this year, Long Fei informed Epoch Times that during the Qing Ming Festival, his ancestral tomb was desecrated, orchestrated by two creditors with high-interest rates, one demanding 340,000 yuan and the other 160,000 yuan.
When the creditors called him, informing of his family tomb desecration, Long Fei responded, “I am out working, trying my best to repay gradually. If you’re impatient, you can take my life. I have nothing to lose anyway. If you continue such atrocious acts, don’t blame me for extreme measures as I am already fearless.” Eventually, the creditors waived the interest, settling for the repayment of the principal amount.
He revealed how the debt collection pursuit led him to depression. However, his condition improved after reaching an agreement with the creditors, and he is now preparing to seek employment. Nevertheless, recovering from the status of being untrustworthy takes time, especially after the pandemic, resulting in reduced incomes across all sectors, restraining individuals from investing. “Among our circle, the reality is that anyone with a bit of ambition is in debt,” he remarked.
He admitted to being unable to repay the bank debts. Following their investigation, the bank discovered his lack of assets and offered to settle for an 80% discount on the principal amount. However, even with the discount, he still cannot manage to repay the debts.
Long Fei identified systemic issues as the core reason for the helplessness faced by debtors. He criticized the governance system that blocks paths for untrustworthy individuals, especially the credit restriction measures. He urged for reforms in systems such as high-speed rail and flights, suggesting that the government is squeezing debtors to the point of no return.
According to him, many debtors have fled to Vietnam in recent years, relocating their factories to evade debts. He mentioned the case of a friend from Hebei who dealt with legal troubles and fines in China, eventually marrying a Vietnamese woman and seeking opportunities in Vietnam due to disillusionment with the domestic environment’s harsh realities.
Long Fei highlighted the harsh experiences faced by individuals, asserting that a person like Zhang Hezi, who profited from the pandemic situation (COVID-19 nucleic acid testing), incurred heavy fines despite minimal earnings. He criticized the unfairness of the legal system, penalizing entrepreneurs unfairly with hefty fines in the Chinese context.
Alternatively, some debtors claim to be “doing well.”
In Guangdong, a 34-year-old beauty industry entrepreneur named Huang Xing (pseudonym) has been in debt since 2016, owing over six million yuan initially, with around two million still unpaid. While the debts to private lenders make up the majority, he remains adamant about not repaying the debts to his employees.
He asserted, “I currently owe my employees over a hundred thousand yuan but I have no intention of paying them back. If they sue me, so be it. The new car I bought and the house are not under my name, let them sue. I am already facing enforcement actions.”
Huang Xing recounted his initial anxieties when the debt crisis emerged, leaving him petrified. However, he gradually learned to face the challenges with composure. He expressed a commitment to repay the debts to friends who supported him during tough times but was reluctant to repay the bank loans. The banks have attempted to negotiate with him multiple times, offering to waive interest and fines, proposing deferred repayment plans for the principal amount, but with his financial constraints, he is unable to comply.
For Huang Xing, the official limitations post being placed on the blacklist have minimal impact on his work and daily life. After being blacklisted, Huang Xing ventured into a partnership in Guangdong to establish a hair care products factory. Despite his involvement as a shareholder and a director in the company, he conducts transactions through family members’ bank accounts due to frozen assets and restricted payments on WeChat. He shared his strategies for using third-party channels to manage travel expenses, like high-speed trains and flights, ensuring he can continue his activities independently, highlighting his adaptability within the constraints.
He detailed his methods of affiliating with an acquaintance’s foreign company to navigate visa approvals for business purposes successfully. Huang Xing affirmed that despite being on the blacklist for years, he has successfully avoided detention thanks to the recognized logic by the courts of limited detentions within a specified period.
Huang Xing reflected on his current situation, acknowledging that he has no assets under his name and has been flagged as untrustworthy. He specified distinctions between untrustworthy and dishonest individuals, highlighting the nuanced nature of their circumstances. He reiterated his commitment to managing the debts responsibly but acknowledged that full repayment remained a challenge.
In the past few years, the contrast between the credit systems in the East and the West has been stark. While Western credit systems are highly commercialized economic tools, the Chinese social credit system acts as a government governance mechanism. Various scholars, lawyers, and human rights organizations have voiced concerns about the oppressive nature of the Chinese social credit system.
Legal scholar Shen Kun from Peking University highlighted in a 2019 article the potential infringements on principles such as “rule of law,” “respect for human rights,” and “prohibition of improper linkage” due to punitive measures against untrustworthy individuals. These practices could violate rights to reputation, privacy, and personal dignity.
China’s authoritative regime has raised concerns globally about the social credit evaluation system being used as a political surveillance apparatus. Human Rights Watch and other organizations view this as a part of extensive surveillance programs aimed at stifling dissent and maintaining stability, particularly evident in regions like Xinjiang where it combines with predictive policing.
China expert Li Linyi suggested that systems that operate efficiently in the West could morph into deformities when transplanted to China under the Communist Party’s amendments, bearing characteristics of tyrannical governance. Despite the facade of such systems, individuals with connections can circumvent blacklisting through asset transfers, spurious litigation, or leveraging relationships to evade scrutiny or enforcement measures. However, the challenges persist for ordinary creditors seeking debt repayments, with courts struggling to enforce judgments effectively, leaving some creditors unable to recover their dues. The prevalence of unresolved debts with banks turning bad reflects a systemic financial crisis in China.