The People’s Bank of China has given the green light to US ratings agency S&P Global Inc to offer credit-rating services on the mainland via a wholly-owned unit, the Wall Street Journal reports. The move is a breakthrough for the world’s big three agencies after years of seeking access to the $11 trillion Chinese interbank market.
For almost two years Beijing has promised to allow foreign rating houses to set up wholly-owned subsidiaries. Until now, those wishing to operate in China had to open a joint venture with local partners.
It is thought that the resistance to market giants such as S&P and Moody’s was due to their downgrading of China’s sovereign debt, with sentiments worsening at the onset of the US-China trade war.
China’s rating system has been heavily criticised for being overly positive, granting domestic companies favourable ratings in order to encourage bond purchases and create a more robust image of the market.