In the past Chinese have lived in small villages. Even though the land is vast, people rarely moved to other places due to lack of means and the atrocious government policies. So ordinary people dealt with relatives and village folks in their entire lives. Trust was based on the threat that you would be practically dead if you behaved badly and were shunned by the village.
Now coming into the 20th century, people started moving into cities to interact with strangers. It's a new and somewhat shocking experience, because most of them only knew the way of life which you just obey the orders from parents/senior family members, follow the old rituals. Unlike the western countries which went through centuries of Enlightenment, the new Chinese cities are almost void of social and civil code, void of sensible law and law enforcement. That's what China has been through in the last century. Quite a few, now escaped from the watchful eyes of folks back in the villages, use the newly gained freedom to conduct unlawful activities, from fabricating their credentials, to using dirty recycled oil to prepare food, all the way to bribing and accepting bribes to drive people away from their home in order to build a shopping mall. So imho ordinary Chinese do not trust each other that much. They seek insurance(strong guanxi is a form of it) in all daily interactions, and hope others would behave.
