China-based Ratings Firm Set Up to challenge US Dominance
This is an important development. China’s Dagong has been doing independent ratings of domestic and international firms and government debt for some time now. The collaboration is the way forward to break the US oligopoly in a key financial function.
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The groups behind a new China-based ratings firm said Wednesday they planned to break the dominance of US agencies in assessing state and company debt, a much-criticised part of the financial system.
China’s Dagong, Egan-Jones Ratings (EJR) of the United States and RusRating in Russia are to set up a joint venture within six months to be headquartered in Hong Kong, the companies said at a news conference unveiling the partnership.
The three partners are inviting “organisations from every country” to join Universal Credit Rating Group, and Dagong chairman Guan Jianzhong said dozens of companies from more than 20 countries have expressed an interest.
The new group is hoping to break the stranglehold of US-based Fitch, Standard & Poor’s and Moody’s, which provide vital risk assessments to investors about debt instruments, in the next five years.
“I believe we can do this. Our goal is to form a new system with the synergy of everybody that will balance the existing system,” Guan said.
The global financial crisis proved that the current international ratings system has flaws that “jeopardise human prosperity and development” and needs to be reformed, the firms said in a document they dubbed the “Beijing Declaration”.
– AFP