As of July 2020 the Chinese corporate bond market had grown to become the second largest in the world, valued at $7.4 trillion, behind the United States at $10.9 trillion. The United States and China make up make up 45 per cent of the total global corporate bond market, in which 53 per cent ($21.5 trillion) of outstanding corporate bonds are issued by financial institutions. In the light of such empirical dynamics, it is imperative to look at credit rating in China.

A brief history

China's endeavour to create a more market- oriented financial system over the last 30 years predetermined, at least in the long run, that banks would no longer play their traditional role in financial intermediation and that a financial infrastructure would be needed in which CRAs fulfil a key role in the governance of capital flows. In recognition of the structural power of non- state actors, such as CRAs, in a financially globalized world, the Chinese authorities started to develop a domestic credit rating industry in the context of its own capital market development. In 1987 China took the first steps to establishing a credit rating industry by introducing new regulations on corporate bonds (Cousin 2007: 35). At the beginning of the 1990s corporate bond rating became the core business of the Chinese rating industry (Gras 2005: 32). As the former planning commission, the National Development and Reform Commission (NDRC), retained exclusive authority as the market's gatekeeper, Chinese CRAs had the symbolic function of creating the semblance of a developed capital market. Consequently, the factual influence of CRAs on bond issuers and investors was characterized as weak at the time (Kennedy 2008).

This began to be reversed only in the early 2000s, when the industry started to develop (Chen & Everling 2002). In 2002 the China Securities Regulatory Commission (CSRC) brought in comprehensive regulations for the CRA industry, including accreditation requirements (Kennedy 2008: 75). This was the same CSRC, preceded by the People's Bank of China (PBoC), that had since the late 1990s been the guiding force behind the creation of a fully fledged and functional credit rating industry following the American model.