An Emerging Credit Reporting System in China

This paper examines the development of a credit reporting system in China. We first outline the rationale for having a credit reporting system through reviewing the literature on asymmetric information. We then proceed to discuss how the credit reporting system works in China. First we present a case study of a private credit reporting agency in Chengdu that was established in 2000. This was the first credit reporting agency in Chengdu and one of the earliest in China. Second, we discuss the progress the People’s Bank of China has made in establishing a unified national credit reporting system since 2004. It is clear that China has made much progress in developing a credit reporting system, already operating the largest credit reporting database in the world. There is, however, still plenty of scope for improvement including better cooperation in public and private provision of credit reporting services with a view to providing a more streamlined product. * Lecturer, School of Economics, University of Wollongong. Telephone: +61 2 42214399. Email: [email protected] † Professor, Department of Economics, Monash University, 900 Dandenong Road, Caulfield East 3145, Australia Telephone: +61 3 99032134. E-mail: [email protected] © 2007 Guibin Zhang and Russell Smyth All rights reserved. No part of this paper may be reproduced in any form, or stored in a retrieval system, without the prior written permission of the author. AN EMERGING CREDIT REPORTING SYSTEM