China is expected to launch its first national private credit appraisal system later this year, one of the several major financial infrastructures China planned to put in place this year, an expert said in Beijing over the weekend.

Li Yang, director of the Finance Institute of the Chinese Academy of Social Sciences, said the system will play an important role for China to control financial risks.

Addressing the 2005 Fortune China Seminar over the weekend in Beijing, Li, also a member of the Monetary Policy Committee of China's central bank, said China has set up a national corporate credit record system, and a number of private credit appraisal systems have also been established in some areas.

A lack of a national private credit record system has been blamed for the high risks the country's banks are faced with when offering credit loans.

Zhou Xiaochuan, governor of the central bank, said a lack of a national credit appraisal system in China is the major reason behind the high bad loan rate of the country's state-owned commercial banks, which dominate the country's credit loan market.

Su Ning, deputy governor of the central bank, said the Chinese central government has set up a task force to help establish national corporate and private credit appraisal systems.

Shanghai, the first city on the Chinese mainland authorized to collect personal credit information, leads other provinces or municipalities around the country in introducing a personal credit system.

The personal credit rating system in Shanghai, China's biggest banking and economic center, is beginning to take shape as one in four residents have their personal credit files recorded by an authorized credit information company.

A spokesperson for the Shanghai Credit Information Service Co. authorized to gather the information said that the company had collected credit records on 5.21 million residents in Shanghai, or 80 percent of the city's credit consumers ranging from 6 million to 7 million.

It also gathered credit information on 600,000 large and medium-sized firms.

Source: Xinhua