China Strives to Construct Credit System

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Last updated at: (Beijing Time) Friday, June 07, 2002

China Strives to Construct Credit System

A credit system has been set up in Shanghai City, incorporating the credit ratings of over 100,000 businesses into a local data bank and connected to a credit deviation warning system in Beijing.

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A credit system has been set up in Shanghai City, incorporating the credit ratings of over 100,000 businesses into a local data bank and connected to a credit deviation warning system in Beijing.

Grassroots demands for a credit-worthy Chinese society are turning into reality across the country, whose traditional practices are based on faith and honesty.

It is now commonly understood among Chinese individuals, businesses and government departments that a lack of corporate credibility is blocking the way for China's economic development and financial security.

A recent survey shows that credit failure of Chinese businesses has led to an economic loss amounting to 600 billion yuan. Payment default, breach of faith and fake products are the most dominant problems in China's corporate credit system.

Zhang Delin, an official with State Economic and Trade Commission, said that the government should play a key role in building the credit system by formulating laws and regulations, monitoring specific moves, establishing an open credit information network and punishing those who break faith.

Faith-breaking activities seriously damaged the economy in Chaozhou and Shantou, south China's Guangdong Province last year, forcing local businesses to accept the fact that credit worthiness is essential for their successful operations.

A sound credit system would constitute a solid foundation for China's financial development, said Chen Yuan, president of China Development Bank.

Sources said that China's major commercial banks are now busy completing an internal credit-evaluation system to support credit activities.

A better-constructed credit system would also benefit small businesses as well as larger enterprises and institutions.

Long-term prospects strongly support a credit system, according to Chen Qingtai, vice-director of the Research Center for Economic, Technological and Social Development Under the State Council.

Experts said that an increasing number of Chinese laws and regulations will relate to establishment and operation of a social credit system, which is widely expected to play a more important role in guiding, guaranteeing and promoting establishment of the long-awaited system.

The establishment and successful operation of the credit system in China would help the country to realize conditions for its accession to the World Trade Organization.

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