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China brings new rules into int'l rating system

07-13-2010 14:37 BJT

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A Chinese company has unveiled the country's first sovereign credit rating report. And there are some unexpected findings - many economies fare quite differently, compared to assessments by western credit rating agencies.

Dagong Global's sovereign credit rating report covers 50 key economies. The valuation for 27 countries are markedly different compared with those by western rating agencies, such as Moody's and Standard and Poor's. Dagong Global's chairman says that's because the company places more emphasis on a country's ability to repay debt, rather than borrowing ability.

Guan Jianzhong, Chairman of Dagong Global Co. said "Western credit rating agencies determine a country's rating based on how much it can borrow. But Dagong mainly focuses on the country's fiscal revenue, or its wealth creating capacity. That's why the results are different."

Experts say many countries have realized the importance of credit ratings, and have started to support their own rating agencies. They also say China's independent credit rating may play a part in the reform of the international credit rating system.

Wang Jianye, Chief Economist of Export-import Bank of China said "Credit is the biggest asset for credit rating agencies. It comes from their credit rating records. China needs to build a highly competitive credit rating industry. Also, only big countries such as China have the ability to break the monopoly of western countries."

Experts say this is a historical opportunity for China to participate in the making of new rules for international ratings. But there is still some work ahead for Dagong Global to build a global reputation.

Editor:Xiong Qu |Source:

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