The planned relocation of the central bank's credit information center from Beijing to Shanghai in three to four years will boost the city's status as the financial hub. More importantly, it should be deemed as a major step in pushing forward the country's troubled credit information system.
The credit information center of the People's Bank of China sealed a deal with the Shanghai Bankcard Industry Park Co Ltd recently for the move.
The construction of the new center, a legal entity under the central bank, will soon begin in Pudong's Zhangjiang Hi-Tech Park. Upon completion, it will expand from the current staff body of more than 100 people, responsible for the construction and operation of the credit information system of businesses and individuals.
While praising the move, it should be noted that this is just the first step in an arduous long march toward building a sound credit information system in China.
Poor credit of businesses and individuals has long been considered a key impediment to the country's economic development in the last three decades.
Breach of contracts, fleeing of debtors, tax evasion, insider trading, bribery, fake and shoddy products, fake business information, false advertisements and cooked financial reports are common in the business world.
Without a solid legal system and a well-established credit information system, unscrupulous companies and individuals are often able to evade the punishment they rightly deserve.
While a good credit system is vital for facilitating social and economic development, the collapse or crisis of a credit system could be disastrous. It will hamper the normal and smooth growth of the economy and may well cause financial and economic chaos and crisis.
To help set up a sound credit information system, the National People's Congress, the country's legislature, should speed up the formulation of a much-yearned law governing credit information so that the undeveloped industry can embark on a fast and healthy growth path.
Besides the central bank entity, non-governmental credit service businesses should be encouraged to provide truthful information as well.
Finally, relevant laws and regulations should be strictly enforced so that businesses and individuals with poor credit are penalized.
(China Daily May 9, 2007)