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China Rating Companies Say Honesty Doesn’t Pay as Risks Ignored

Guan Jianzhong, chairman of Dagong Global Credit Rating Co.

Guan Jianzhong, chairman of Dagong Global Credit Rating Co.

Photographer: Nelson Ching/Bloomberg
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Dagong Global Credit Rating Group’s chairman says some of China’s debt rankings are “useless” and pose a risk to the world’s second-largest economy. Its biggest local rivals agree the industry needs tighter regulation.

Dagong has seen its market share halve in six years to 20 percent due to “irresponsible” competitors, Chairman Guan Jianzhong said in a March 24 interview in Beijing. Some companies are compromising evaluations to win business and a lack of defaults has made it hard to gauge the assessors’ trustworthiness, according to Dagong, China Lianhe Credit Rating Co. and China Chengxin International Credit Co.