Research On China's Sovereign Credit Rating

Since 21st century, governments of different counties spare no pains to strengthen financial globalization; however, as well as promoting the rapid development and integration of global finance, financial opening impacts financial securities across the world. Since the Asian financial crisis, the Mexican crisis, the subprime mortgage crisis and European debt crisis have occurred consequently, this stimulates people to take the sovereign credit rating and financial security more seriously.As a ceiling of credit for economic bodies, sovereign credit rating influences the ability and cost of capitalization in international financial markets for a country's government and institutions. In financial markets with information asymmetry, the more international investments increase, the more investors need the information for target country's sovereign credit situation. Driven by this demand, sovereign credit rating has become an industry with a large scale. The influence power of the information released by the three authoritative credit rating companies which are certified by US SEC is without question.As an emerging market country, the meaning of sovereign ratings for China lies not only in clearing obstacles for external capitalization, or reducing risk in foreign investment, but also lies in"internal rating", which means to check the factors which impact the credit status by credit models, in order to grasp the situation of domestic economy and keep away from potential risks. By studying the credit patterns of Standard & Poor's, Moody's, Fitch and PRS, we summarize a series of rating factors and rating indicators, based on which, we conduct an empirical research on china's sovereign credit state through a combination of qualitative and quantitative research methods.Finally, the article analyzes the risks and problems of China's credit rating industry , demonstrates the principle of establishment of an independent credit rating system and institution choice. China's economy and society are entering a creditera rapidly, the regulation of the credit rating industry of China is a thing we must do to maintain China's economic security and reconstructing the international financial system.