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China's credit rating company rejected by US

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-07-28 14:09
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The Dagong Global Credit Rating, a professional credit rating and risk analysis agency in China, has been rejected by the US government from entering the American market, Guan Jianzhong, chairman of the agency said, according to the Beijing News Wednesday.

Guan explained the US rejected Dagong in April for two reasons. Firstly, that the headquarters of Dagong was located in Beijing with no branches in the US and they did not rate any US companies or had subscribers in the country. Secondly, the US Securities and Exchange Commission (SEC) was unsure if Dagong could comply with the local exchange acts.

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In response to this, Guan said the application papers were drafted in accordance with US laws. Without being approved to enter the market, the agency could not set up branches or launch its business and if there was no business in the US, it could not be judged if it obeyed the US laws, the newspaper reported.

He said it was protectionism in sovereign credit ratings.

Dagong released the Sovereign Credit Risk Report of 2010 containing the ratings for the first batch of 50 countries in July, as an attempt to break the monopoly of three most notable counterparts in sovereign credit ratings: Moody's, Standard & Poors and Fitch. The result had a 54-percent difference from the ratings that the Big Three gave out.

The three have been rapped for being too slow to downgrade heavily indebted EU economies, most notably Greece and Spain.