An Emerging Credit-Reporting System in China

A more complete credit-reporting system has to evolve in China in order to better manage risk and reduce the amount of nonperforming loans. The rationale for having a credit-reporting system is outlined through a review of the literature on asymmetric information. A case study of a private credit-reporting agency, established in 2000, is studied. This was the first one in Chengdu and one of the earliest in China. In addition, there is a discussion of the progress the People's Bank of China has made in establishing a unified national credit-reporting system since 2004. China has made much progress in this sphere and at present operates the largest credit-reporting database in the world. There is, however, still plenty of scope for improvement, including better cooperation between public and private credit-reporting services, with a view to providing a more streamlined product.