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China’s Efforts to Silence Unfavorable Financial News

Le Monde, a French newspaper reported that China has been trying to hide any bad news about its financial data from the world. China’s central bank, People’s Bank of China, established a Chinese credit rating company, Dagong Global Credit Rating Co, Ltd in 1994, to “serve” both the domestic market and the world. In 2013, Dagong merged with Russia’s credit rating company RusRating and a small U.S. rating company Egan-Jones Ratings, to form Universal Credit Rating Group (UCRG) (世界信用評級集團). To build its reputation, UCRG hired former French Prime Minister de Villepin to chair its advisory board and former Australian Prime Minister Kevin Rudd to serve on its advisory board.

In 2010, UCRG was banned from practicing in the U.S. because it refused to comply with the transparency rules of the U.S. Security Exchange Commission (SEC). The European Securities and Markets Authority (ESMA), however, gave Dagong a green light in 2013. Part of the reason was that in the wake of the Greek debt crisis, the E.U. was happy to see a Chinese competitor enter the credit rating market which the British and American agencies dominated.

People soon saw that Dagong served as a strategic pawn for China to enter the European market. In 2018, Dagong was fined in China for corruption and collusion with the evaluated companies. In April 2019, the state power (the communist regime) directly took over the management of Dagong. The ESMA waited another seven months to exclude Dagong from the European market.

Beijing then adopted a new strategy. That is, to publish laws to control what information it feeds to the world. It introduced a data security and protection law in 2021, restricting the freedom of multinational companies to transfer information with their Chinese subsidiaries. It introduced and implemented cross-border data transfer regulations in 2022 to make it impossible for users to access Chinese corporate information databases, such as Tianyancha (天眼查), from abroad. Its new counter-espionage law, which will take effect on July 1, makes it possible to criminalize any exchange of information with foreigners and foreign organizations and companies.

Source: Radio France International, June 20, 2023