The Chinese government has used the technology to block passengers from buying plane and train tickets for up to a year as a punishment for offences.
Those who fell foul of the system have been accused of committing financial or legal wrongdoings.
They could also face limits on their children’s education choices, which would restrict them to ordinary state schools, according to Liu Guixiang, a member of the Supreme People’s Court’s judicial committee.
If the school’s fees are higher than those of normal schools, he said it is considered “luxury” spending, The Daily Mail reported.
The children would then be restricted from attending if their tuition fees were paid by the person who has been discredited.
Mr Liu also claimed the system would not punish anyone incorrectly or penalise family members in order to put pressure upon them, and called the Chinese legal system “very civilised”.
The move to put citizens on restricted lists is in line with Chinese president Xi Jinping’s plan to construct a system based on the principle: “Once untrustworthy, always restricted.”
Last year, US vice-president Mike Pence denounced it as “an Orwellian system premised on controlling virtually every facet of human life”.
Offences include committing acts such as spreading false information about terrorism and causing trouble on flights, as well as using expired tickets or smoking on trains.
People could also be punished for failing to pay fines or other financial wrongdoings.
It comes as China denied it is running “concentration camps” in the far-western region of Xinjiang and instead claimed they were “boarding schools”.
Activists have claimed more than one million people, predominantly Muslim, are being held in mass detention camps in the region.
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