Reply With QuoteDoes anyone outside China actually pay attention to their ratings system?
Chinese rating agency strips Western nations of AAA status
http://www.telegraph.co.uk/finance/c...AA-status.htmlChinese rating agency strips Western nations of AAA status
China's leading credit rating agency has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in favour of the West.
Beijing office buildings - Chinese rating agency strips Western nations of AAA status Photo: AFP/***** Images
Dagong Global Credit Rating Co used its first foray into sovereign debt to paint a revolutionary picture of creditworthiness around the world, giving much greater weight to "wealth creating capacity" and foreign reserves than Fitch, Standard & Poor's, or Moody's.
The US falls to AA, while Britain and France slither down to AA-. Belgium, Spain, Italy are ranked at A- along with Malaysia.
Meanwhile, China rises to AA+ with Germany, the Netherlands and Canada, reflecting its €2.4 trillion (£2 trillion) reserves and a blistering growth rate of 8pc to 10pc a year.
Dominique Strauss-Kahn, chief of the International Monetary Fund, agreed on Monday that the rising East is a transforming global force. "Asia's time has come," he said.
The IMF expects Asia to grow by 7.7pc in 2010, vastly outpacing the eurozone at 1pc and the US at 3.3pc. Emerging nations hold 75pc of the world's $8.4 trillion (£5.6 trillion) of reserves.
Dagong rates Norway, Denmark, Switzerland, and Singapore at AAA, along with the commodity twins Australia and New Zealand.
Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".
"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.
The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.
Dagong appears to base growth potential on past performance but this can be misleading, especially in states enjoying technology catch-up. Japan was a high-flyer in 1970s and 1980s before stalling when the Nikkei bubble burst. It has been trapped in near perma-slump ever since.
China may start to face some of Japan's demographic problems by the middle of this decade when the working age population peaks.
The Western rating agencies put a high value on a long-established rule of law and government institutions that have proved resilient over many decades, or even centuries. China's political system may appear strong – as did the Soviet Union's – but only time will tell whether its foundations are brittle. The violent upheavals of the Cultural Revolution are still a very fresh memory.
Does anyone outside China actually pay attention to their ratings system?
No
Does anyone actually pay attention to any rating system?Originally Posted by budgie
It begs the question on who appoints and who is on the board of directors of any Chinese company. I would not be surprised if they are Communist Party Cadres.
The most powerful companies are state owned. Why expecting surprised in the first place?
The thing is when you have big enough market, you can do the talking.
So if these companies fail or engaged in fraud, can the shareholders hold the Board of Directors (CCP members) accountable in court? How would the judge (also a CCP member) rule in such cases?
There's a lot of conflict of interest here.
Hi Ordie in china if you rob and get caught by the system the state kills ya,,,
Since the government is the biggest shareholders. The heads of the companies who commit crimes may get punishments both from party and court. Party's punishment comes first. How the judge rule is based on laws of course.
To me, there is no conflict. You see, the government is the boss. When employees make mistake, they know what's waiting for them.
Why shouldn't the chinese rate those who owe them money? Seems logical to me. On their policy on corruption: You end up donating all your organs. And nobody cares if you have donor card either. Those chinese are hard core.
I think not. But if you read how the Chicom rating is related to debts, they could post the article on the GOP website - until their next presidency when the GOP will take over the spending fest.
Those who will borrow from them will.
If you do not borrow from the Chinese, then no worries. Chances are many will and those can count on the Chinese banks determining their interest based on this rating.
According to the US treasury, Chinese own almost 900 billion of US treasuries.
http://www.ustreas.gov/tic/mfh.txt
Likely the other Western nations have some moneys owed to the Chinese.
sounds crazy...
These ratings actively used by financial institutions to rate debts, basically lower rating -> bigger percent to debt. Greece is a perfect example here, their rating fell, after that they could borrow money for 12-15% per year. Unsustainable rate for such economy as theirs. So Chinese decided, if Western agencies (US agencies more precisely) do not lower ratings of US and many EU states, which is ridiculous, so they should do it themselves.
While many will agree that Chinese ratings are useless right now, in near future this could change very quickly. Only Chinese have massive amount of money, so if you need to borrow, you will do it by their terms. Very smart move in my opinion.
Silly Chinese. We invented Capitalism. That makes us the bedrock of Democracy. To question the AAA status is to blaspheme against Freedom. Just one more sign that points to the Chinese being the great enermy that we must vanquish. If not by us, then by our childern. Democracy and freedom are not negotiable!
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