su ning : the evolution of a credit information system for china speech by mr su ning, deputy governor of the people ’ s bank of china, at the international seminar on the application of credit information products in managing credit risks of commercial banks, tianjing, 20 june 2007. * * * distinguished guests, ladies and gentlemen, good morning. i am very pleased to attend the international seminar on the application of credit information products in managing credit risks of commercial banks. first, on behalf of the people ’ s bank of china, i would like to express gratitude to our co - sponsor of this seminar, the international finance corporation. also, i would like to extend warmest welcome and gratitude to experts from abroad countries and delegates presenting here. taking this opportunity, i would like to share with you my observations on several aspects. i. credit information services have started to play a role in promoting china ’ s economic and financial development. credit information system serves as a solid foundation for the performance of modern financial system and an indispensable infrastructure for credit market development. in recent years, in order to meet the needs of global credit market development, 122 countries and regions have established credit reporting agencies that provides credit information registration services. the international community has reached a consensus in developing credit information, preventing risks and expanding credit services to promote economic development. building up a credit information system according to a country ’ s specific circumstances and with reference to international best practice constitutes an important part in improving economic and financial system. at present, while developing countries have started to build credit information systems, some developed countries also steadily improve their credit information systems, in particular on how to establish a centralized credit information registration system to comprehensively collect both positive and negative financial or non - financial information from enterprises and individuals, and protecting the rights of borrowers in legal forms in terms of access to such information and etc. in recent years, to fulfill the obligation assigned by the state council of “ regulating credit information sector and promoting the construction of a social credit system ”, the people ’ s bank of china ( pbc ) has set up the national unified enterprise and individual credit information databases with joint efforts of banking institutions. the individual credit information database was founded from scratches, while enterprise credit information database was upgraded based on the bank credit registration and consultation system established in 1997. the two databases were officially put into operation in january and july 2006 respectively, which greatly improved china ’ s credit environment. measured by the benchmark in the doing business

shock therapy ” to russia and eastern european countries, but later on this was described as “ shock with no therapy ”. we should be cautious to offer the same prescription again, so as not to have credibility jeopardized. china will only consider to take the gradualist reform approach that wins the trust of the masses of the chinese people, rather than a “ shock ”, not to mention that the us has not taken the lead to use “ shock ” to adjust its imbalances. global imbalances and the role of exchange rate 14. the chinese government has already started to apply a mix of policy measures, including expanding domestic demand, lowering down saving rate, opening up the market, floating the exchange rate and increasing import, so as to improve the balance of payments. with the implementation of these policy measures, the pbc anticipates that it needs a time span of 2 - 3 years to achieve an approximate trade balance. however, what is worrisome is that, according to the analysis by the chinese economists, even china basically realized a global trade balance, the united states might still incur large trade deficits and it would still be very difficult to achieve a bilateral trade balance between china and the us. so the ball would be actually not in china ’ s court. 15. the us and china should make joint efforts to address the trade imbalance between the two countries. when the chinese government has been making an efforts as mentioned above trying to relieve the problem, complaints are also heard that the us has been slow in taking concrete measures to reduce its twin deficits and improve saving rate. 16. some us economists assume that the exchange rate is the key to fixing the trade imbalance, while on the chinese side there are economists from different schools and some also tend to believe in this assumption. however, such assumption failed in statistical test by using the trade data and real effective exchange rate recorded in china over the years. besides, empirical knowledge about many other countries also does not support such a judgment. therefore, we should be cautious to rely solely and excessively on exchange rate function to realize current account balance. 17. according to the articles of agreement of the imf, “ member countries shall have the right to choose exchange rate regime, either free floating, managed floating or fixed exchange rate, at their own discretion ”. in this sense, there exists no such an exchange rate regime that can be labeled as “ manipulating exchange rate ”. china ’ s gradual shift