Under this new system for ranking businesses, both foreign and domestic companies will be required to install surveillance cameras in their premises and share the data with the government.
They will also be rated on their tax record and compliance with a range of existing laws, including customs or environmental regulations.
Those who violate rules will be placed in "blacklists" and subjected to "immediate and severe punishments", the EU Chamber of Commerce in China said in a report published Wednesday.
The sanctions are not limited to penalties but also include more frequent inspections, customs delays, not getting subsidies or tax rebates and public shaming, the report added.
"The corporate social credit system could mean life or death for individual companies," said Jorg Wuttke, president of the EU chamber.