The implementation is somewhat disconcerting, but I’m not sure the underlying policy isn’t a good idea. Culture matters. When I go to Tokyo and see people walking a couple of blocks to cross the street (there isn’t necessarily a cross walk on every block), or carrying their litter with them, versus what I see in say New York, I’m astounded. Similarly for the fact that nobody has ever asked me for a bribe in the US, versus what you might see in Bangladesh. These virtuous behaviors are a better way to live and make life better for everyone. China seems to realize that and be trying to change culture in a systematic way. It should probably be done more by carrot than stick, but there is a a kernel of a good idea in there.
(I should note that Western countries had their own large-scale nearly universal social indoctrination and social credit systems—organized religion. Indoctrinating virtuous behaviors is a social function that needs to happen, the question is how do you do it. Note also that Chinese cities exist at a scale where the informal mechanisms for social credit break down. If you litter on my street, people will see you and they will notice. We regularly talk about neighbors who display antisocial behaviors. In New York? Outside maybe your condo board there are no such mechanisms.)