information

Main Business		Juridical judgement
Credit investigation	Sexual harassment protection	Economic spy investigation
Safety & security	Business fraud investigation	Take measures against pretense
Legal aid	Hacker investigation	Business information research
Copyright protection	Evidence investigation	Business secret protection
Lawsuit agent	Trace investigation	Insurance fraud investigation

western exploitation

W T O

travel & environment

scientific & information

agriculture & industry

finance & investment

medicine & hygiene

city & construction

	City & Construction
	Shanghai Ushers in Credit System
	Sea Level Rising Near Shanghai
	More Airlines Use Macao International Airport
	Housing projects continuing
	Guangzhou to get new airport
	City's construction quality on the up
	City construction wrecks ancient wall
	Beijing's building market to expand
	Housing Reform Moves Steadily On
	Guangdong Province
	Beijing Municipality
	Shaanxi Province
	Shanghai Municipality
	Heilongjiang Province

Shanghai Ushers in Credit System

Shanghai, a financial hub of China, is taking the lead in the building of a credit rating system.

A database, which will store and process the credit history of 2 million local residents, celebrated its official opening last Saturday, according to the local Liberation Daily.

The facility was reportedly using e-finance solutions provided by the Shanghai Huateng Software Systems, a joint venture between the domestic East China Company and Tandem Computers.

Collected and processed by the Shanghai Zixin Co (SZC), the 2 million sample subjects involve 1.18 million personal credit card holders and 680,000 people who have borrowed money from banks. The database covers basic information, credit history and court records.

The database, which is updated every day, is accessible to Shanghai's 15 large banks and all their city branches, which is expected to help boost consumer lending. The lending area is viewed as essential by the government in bolstering consumption and economic growth, and by banks as almost a virgin land with huge growth potential.

SZC plans to expand the database by adding information about 6 million public utility beneficiaries and 13 million people registered with the local social securities bureau.

The company will in the future open the database to the legal, taxation and authorities of other sectors. And it will let consumers themselves view their own credit background so that they can make their loan plans more wisely.

SZC, with a registered capital of 5 million yuan (US$602,400), was founded last year by four companies with a background in local government. It also borrowed 5 million yuan (US$602,410) from the Shanghai municipal government for development of the database, according to Beijing-based Financial Times.

SZC bought the samples from banks and other sources at a cost of 0.2 yuan (US$0.024) each and sells its credit reports at 10 yuan (US$1.2).

Brisk financial activity, a large number of financial professionals, and an urgent need for a credit rating system incurred by quickly expanding individual lending, are major factors that have made Shanghai the pilot city in the establishment of such a system, experts said.

Outstanding consumer loans totalled 54.7 billion yuan (US$6.59 billion) at the end of 1999 accounting for 12 per cent of outstanding loans from local banks, compared with a mere 1 per cent in 1996.

Nationwide outstanding consumer loans only make up about 3 per cent of total outstanding loans of banks, much lower compared with the 30 per cent in some countries with sound credit rating systems. The majority of consumer loans from domestic banks are accumulative housing funds and consumer mortgage loans, which are deemed as low risk. They are not credit loans in a real sense, according to our daily.

Consumer loans are an important business to banks in credit-based countries for higher and quicker reward compared with corporate loans. However, without an easily accessible and fully developed database for credit history, financial institutions have to do their own credit investigations when making lending decisions, resulting in low efficiency and high risks. Even bona fide loan applicants find it difficult to get loans because of the time-consuming investigations.

For further growth of consumer lending, a credit rating system is a must, said Feng Xiao, a manager of SZC.

Shanghai's initiative will pave the way for the practice in other major Chinese cities and will eventually lead to a complete interconnected nationwide system.

Regarding institutional credit rating, information centres have been set up covering 300 cities last year, according to Beijing Evening News. The information centres are expected to be linked within the year, according to Chen Jing, an official of technology operations of the People's Bank of China.

Together with the development of the personal credit rating databases, a nationwide credit system able to perform multiple tasks is expected to take shape in two to three years from now, Chen said.