China’s central bank said it supports fintech companies to enter the credit rating market and encouraged existing rating firms to consolidate and expand, reports Caixin. In an opinion article published Tuesday, the People’s Bank of China (PBOC) said it will fully implement the findings of the Central Financial Work Conference earlier this month to upgrade the social credit system and the capacity and quality of the system.
The central bank also urged Chinese credit rating companies to explore overseas markets and improve their international competitiveness. There are 52 registered credit rating enterprises in China, including foreign businesses operating independently or through joint ventures with Chinese partners, according to the central bank.
China’s credit rating industry has long been criticized for providing favorable scores for local issuers, downplaying risks and lagging in adjusting ratings. In 2018, there was a rash of corporate bond defaults, including some by issuers that had been awarded relatively high ratings by domestic rating companies.