From what I read it's mostly a credit score and blacklist system. In the 2010s there was a project to use it to reward and punish people for some everyday stuff based on whether it did or didn't align with the party's morals, but it got scrapped. That's the part everyone thinks is going on over there.

I agree it's dystopian, but I live in Germany and we have a similar thing called "Schufa". For most people it mostly means that if they default on a credit, they'll be less likely to find an apartment. It differs from the US one in the sense that banks don't require you to get into debt before they trust you, that whole "build your credit score" nonsense.