An Economic Analysis of China's Credit Information Monopoly

Abstract

The Chinese government is building the largest public credit information database on earth. The Credit Registry Center of the People's Bank of China registers more than 600 million consumers of which 110 million have a credit relationship with a financial institution. The Center is a public utility monopoly which collects information from banks and non-bank institutions - a unique approach developed in China only recently. In other countries, public credit registers and private credit bureaus co-exist, where the latter are in competition with one another. This article provides the first analysis of the Chinese Credit Registry Center. First, I discuss the development of lending to households, because consumer and mortgage markets came into existence only recently. Secondly, I describe the institutional set-up of the register and its regulation, here, China is compared to other countries. At this stage, there is only very little data available on the register, such that the economic assessment necessarily remains limited. One important question discussed herein is whether the Chinese monopoly can serve as an example for other developing and transformation countries that are currently establishing credit reporting systems.