Credit-Based Economy A Must for China: CPPCC MembersMembers of the National Committee of the Chinese People's Political Consultative Conference (CPPCC), who are in session here, have urged building up a credit-rating system to curb rights infringements, frauds and chain debts, on eve of China's entry into the World Trade Organization (WTO).In a report on the outline of the 10th five-year plan he delivered Monday, Premier Zhu Rongji pledged to establish a credibility rating system for individuals in the coming five years, though the system is 150 years old in the West. Ever since its opening up in the 1970s, China has been plagued with fraudulent activities, causing disruptions of varying degrees to the country's burgeoning market economy. The members are of the opinion that absence of personal credit investigation services has "bottlenecked" the growth of consumer credits in the country and hampered Chinese enterprises' efforts to compete on the international market. "A credit system is a foundation stone for a modern market economy," said Wu Jinglian, a well-known Chinese economist. China's socialist market economy is nothing but a modern market economy and therefore, the country should speed up the pace of setting up a credit system, he noted. Shanghai, China's financial center and largest metropolis, pioneered the establishment of a credit system. Last June, the personal credit system operated by the Shanghai Credit Co., Ltd. was put into use as a pilot project of the central bank, the People's Bank of China. So far, two million residents in Shanghai have received ratings reports from the company, which has enabled local banks to handle loan applications in a much shorter time, compared with the past. In the nation's capital, a similar program, titled "Credit Beijing," is also under official discussion, which aims to turn the national capital into a model town in this field and a paradise for investors. In the meantime, a special website, "Credit China," has also been put into operation. By clicking to it, users can enjoy credit- based services ranging from on-line ratings, on-line complaints, and on-line debt collection. The website has had many domestic and overseas clients. Some local experts said that credit-based trade could help lower the cost of trading, but it may also cause so-called " information asymmetry." As a result, how to enhance creditability has become a key to developing a modern market economy, they agreed. Member Zhou Jinfeng has put forward a proposal on speeding up the establishment of a credit administration system in the country. The government should work out rules to regulate the market, while departments concerned should open up information resources, so as to let credit management companies offer services like credit investigations and debt collection. The setting-up of a credit servicing network for the public is imperative in China, said Wu. He suggested that the government first set up a commercial system to collect data on personal credit, in order to develop the credit service network. China's upcoming entry into the WTO means that the government will have to administer the market with international rules and that domestic companies, especially exporters, will have to protect themselves with credit management as a weapon, said Zhou. |
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