The app, named the "map of deadbeat debtors," rolled out to people in Hebei, the state-run China Daily newspaper reported. They can access it on WeChat, the country's most popular instant-messaging platform.
The program flashes a warning to show a user that they are within a 500-meter radius of someone in debt.
It shows the debtor's exact location, according to a screenshot of the app.
It's not clear whether the app displays a debtor's name, photos, or any other identity markers.
It's also not clear how much money one must owe - or to whom - to be defined as a debtor.
The app wants to get citizens to keep an eye on the so-called debtors.
China Daily said it would let people "whistle-blow on debtors capable of paying their debts."
It did not say what behaviour could flag someone as capable of paying their debts.
Chinese families traditionally emphasize saving money to avoid spending with borrowed money or owing personal debt.
The new program was described as part of China's social-credit system, an extension of a person's financial credit score that will be mandatory in 2020.
It essentially judges a person's trustworthiness using measures like their ability to pay off loans and their behaviour on public transport.
The argument for a social-credit system is that many people in China still have no formal access to traditional banks and therefore need an alternative system to assess whether they can pay off loans, rent houses, or even send their children to school.
At the moment the system is piecemeal - some are run by city councils and others by private tech platforms that hold personal data, like Alibaba and Tencent, WeChat's parent company.
The country already runs prototype blacklists that list people's names and partially redacted ID numbers.
Some people have already been penalized by the system. More than 6,000 people who failed to pay their taxes or misbehaved on public transport were barred from taking planes or trains in and out of the country between June and January, state media reported.
It's not clear whether users in Hebei have to separately download the "deadbeat debtors" app, also known as a WeChat mini-program, or whether it is automatically installed on their devices.
Chinese tech giants have passed on user data and the contents of private conversations to Chinese law enforcement in the past.
In 2016, China's Ministry of Public Security announced that law-enforcement officers could obtain and use private conversations on WeChat in legal proceedings.
Last year, Chinese authorities in Hefei, in eastern China, said they accessed a user's deleted WeChat messages, apparently without having asked the user or the courts for a warrant.
More than 1 billion people in China are on WeChat. The number is expected to keep growing.
Also from Business Insider South Africa: