China needs to boost its rating agency: official

China should reduce its dependence on foreign credit rating agencies and develop home-grown rating companies, the central bank's deputy governor said at a seminar in Beijing Sunday.

"Several issues with the major global credit rating agencies - like a lack of supervision and their ability to exacerbate fluctuations of the economic development cycle - were exposed during the global financial crisis in recent years," Deputy Governor Pan Gongsheng said at a seminar held by the financial research institution of the Development Research Center of the State Council and China Chengxin International Credit Rating Co.

Pan said the country should encourage the development of its own domestic rating agencies and enhance supervision of the sector.

"The home-grown agencies need to cultivate the domestic market and improve their regulation system," Pan noted.

China's rating industry has been developing for 20 years but was still at an immature stage before 2005, mainly as a result of limited bond issuance and an ineffective bond market.

The central bank issued regulations for short-term financing bill management and required agencies to rate bond issuance in May 2005, since when the domestic rating agencies have developed more rapidly.

The number of rating agencies and professionally qualified rating staff has reached 78 and over 2,400, respectively, with the whole sector seeing annual growth of business income of 20 percent, according to Pan.

The rating sector earned a total of 1.16 billion yuan ($183 million) in 2011, an increase of 43 percent year-on-year, Pan said.

Though the demand for ratings in China is growing rapidly, the county still lacks related laws to regulate the sector, Yin Zhongqing, deputy director of the Finance and Economy Committee of the National People's Congress (NPC), said at the seminar Sunday.

"The State Council needs to release regulations for the industry as soon as possible, and then the Standing Committee of the NPC must speed up the creation of laws for the sector," Yin noted.