Publication Date

Fall 2011

Document Type


First Page



Credit rating is a burgeoning industry in China. However, ever since it was established by State Council in 1993, the development of the industry has faced various impediments. There are currently three major problems hindering its further development, as result of a lack of systematic statutory and judicial guidelines. These problems are: limited competition in the industry, rampant rating shopping and conflicts of interest, and limited remedy in a suit against false ratings. The rating industry in China has followed a different pattern. The statutory threshold requirement has proven too demanding for most rating agencies to comply with, barring many potential participants from the market. In addition, provisions prohibiting rating shopping and regulating conflicts of interest are narrowly drawn, targeting only direct conflicts of interest. While freedom of speech remains an invalid defense, judges' reluctance to recognize substantial intangible harm combined with an insufficient judicial framework together make it hard for plaintiffs to prevail in lawsuits against false ratings.

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