China unveils 1st Sovereign Credit Rating System

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pinecarr's picture
pinecarr
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Joined: Apr 13 2008
Posts: 2246
China unveils 1st Sovereign Credit Rating System

I found an article last night stating that China has established their own Credit Rating System, the Dagong Global Credit Rating Co.  I guess they have decided not  to sit passively by and trust the West's twisted credit ratings anymore; they are going to assess countries' credit worthiness and ability to pay debt for themselves.   I think it is an important indicator. 

 I originally found the article on chinaview.cn/fc/, but my Norton Internet protection SW started screaming about it being an untrustworthy site.  But I found the article had spread to several sites by this AM, and so am linking to one of those here, . I chose the version from Eric deCarbonnel's site, http://www.marketskeptics.com/2009/05/china-unveils-first-sovereign-credit.html, because I like his commentary.  I think he asks the right question at the end:  :Key question: How will Dagong Global Credit Rating rate the US?" [italics mine]

Here is the entire article as it is not too long:

Monday, May 25, 2009

 

China unveils first sovereign credit rating standards

by Eric deCarbonnel

 

 

China View reports that China unveils first sovereign credit rating standards.

(emphasis mine)

China unveils first sovereign credit rating standards
www.chinaview.cn 2009-05-23 20:53:19
Editor: Wang Guanqun

BEIJING, May 23 (Xinhua) -- China unveiled Saturday credit rating standards for the sovereignty entity of a central government, the first sovereign credit rating standards in China, aiming broader participation in global credit rating.

The standards were announced by Dagong Global Credit Rating Co., Ltd, one of the first domestic rating agencies in China.

The sovereign credit rating standards would be able to evaluate the willingness and ability of a central government to repay its commercial financial debts as stipulated in contracts, said the company.

The rating results could reflect the relative possibility of a central government to default as a debtor, and the rating is based on the country's overall credit value, according to Dagong.

My reaction: As China’s financial system becomes more sophisticated, China is quickly cutting its reliance on the services provided by Wall Street and the western banking system. The new Chinese credit rating standards for the sovereignty entities is part of this process.

By developing its own credit rating agencies, China is aiming at broader participation in global credit rating. Since the reputation of US credit rating agencies has been badly damaged by the financial crisis, they are not in a position to defend themselves against this challenge to their authority. Chinese rating agencies will soon play a much bigger role in the global financial system, especially in China.

Key question: How will Dagong Global Credit Rating rate the US?

Since Chinese rating agencies has developed sovereign credit rating standards capable of evaluating “the willingness and ability of a central government to repay its commercial financial debts as stipulated in contracts”, it stands to reasons they will use these new standards to judge the US’s credit worthiness. Furthermore, unlike America’s rating agencies (Moodie, S&P, etc…) which currently dominate the field, Chinese rating agencies are outside the US sphere of influence. It will be very interesting to see what rating they come up with.

 

 

 
DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: China unveils 1st Sovereign Credit Rating System

Nice dig pinecarr - the torch of the super financial power is being taken by China without ceremony or hoopla.

pinecarr said:

Key question: How will Dagong Global Credit Rating rate the US?

I think this will come as a result of secret negotiations between China and the people who control the US, UK and EU central banks.  China has an interest (huge dollar reserves) in keeping the dollar stable but I suspect that they will leverage our dependence on them to extort additional collateral and other special arrangements.

The SCO will be meeting in a few weeks and rest assured they will be discussing our situation.

Shanghai Cooperation Organization: representing half of humanity will hold its ninth annual heads of state summit in the Russian city of Yekaterinburg on June 15th and 16th.

It will be attended by the presidents of its six full members - China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - and by representatives of various ranks from its four observer states - India, Iran, Mongolia and Pakistan - and from several aspiring partner nations yet to be announced.

Iran was the intended victim of thinly veiled threats of US military strikes. In fact the granting of observer status to the nation in 2005 and Ahmadinejad's attendance at three successive heads of state summits - China in 2006, Kyrgyzstan in 2007 and Tajikistan in 2008 - played no small role in thwarting whatever plans the United States and Israel have nurtured for attacking Iran.

Russia's Putin said "We now clearly see the defectiveness of the monopoly in world finance and the policy of economic selfishness. To solve the current problem Russia will to take part in changing the global financial structure so that it will be able to guarantee stability and prosperity in the world and to ensure progress.”

The world is at a historical crossroad with the security and even survival of humanity at stake. One path continues along the way that has been pursued to date, of the right of might and every person for himself regardless of the consequences.

We are entering into a dangerous time where the skinny kids will begin to kick sand in the face of the the now obese western bullies.

Larry

pinecarr's picture
pinecarr
Status: Diamond Member (Offline)
Joined: Apr 13 2008
Posts: 2246
Re: China unveils 1st Sovereign Credit Rating System

Interesting stuff about the SCO, Larry!  I wasn't familiar with that.

I find this whole thing fascinating (in a major anxiety-producing way).  It's like we're trying to see the picture made by a puzzle, when we only have a few of the visible pieces at our disposal. It makes me wonder what that puzzle would look like if we only knew what some of those other hidden-from-view pieces looked like! 

I guess I shouldn't be anxious to find out.  That awareness will probably come all too soon, and it might not be a pretty picture...

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