Problems Faced By the Dual Rating System in the Chinese Market and How to Improve It

Abstract

Credit rating is an important component of the modern financial market economy and has a great impact on the financial market, but China's current credit rating system is facing the problem of inflated ratings, according to Wind data statistics, in the first quarter of 2021 the bond market has 52 credit debt defaults, involving a stock size of 58.351 billion yuan of bonds, the default theme rating pivot significantly increased, the first quarter default theme AAA ratings accounted for the year-on-year increase. The data shows the inflated ratings, and the real market mismatch, for investors information - asymmetry problems increased, for the market economy - the market investment costs rise, investment risk increased, is not conducive to market economic development. In order to reduce the problem of inflated ratings, we have borrowed from the dual rating system and improved it to suit the Chinese market. Although the dual rating system has been around for a while, it has not been implemented because it is not adapted to the Chinese market and Chinese market culture. In this regard, we hope to use market competition to promote competition between rating agencies and to conceptualise the rating of rating agencies, to show the market recognition of rating agencies, to increase market supervision of rating agencies, and ultimately to form a virtuous market cycle. thus breaking the current situation of inflated credit ratings.