1.To Explore the Development Laws for Credit-based Economy
With the research into world credit crisis, Dagong dictates that the society has embarked on the development stage of credit-based economy. It also discovered that two pair of contradictions - production and credit, credit and rating - contribute to the development of the credit-based economy. The former performs as the pro-cyclical power while the latter as the counter-cyclical power. Credit rating fulfills the responsibility of counter-cycle power by revealing debt amount and safety edge, which confirms its orientation in this historic development.
2.Introducing Innovative Theory of Credit Rating
On 25th March 2014, Guiding Principles of Credit Rating by Mr. Guan Jianzhong, the chairman of Dagong, was published as a monograph by People’s Daily Press. This book illustrates the first comprehensive system of rating theories of a century, which is considered to have filed the theoretical gap in the development of credit rating. It also introduces the innovative ‘degree of deviation’ of repayment sources based on wealth creation capability, which sets a solid ground for the development of credit rating.
3.Research of Western Rating Theories
Dagong points out that the default rate is the core idea of western ratings. Instead of a methodology, it is rather a method of ratings verification and would generate completely opposite results of the actual indications. Dagong considers the upper-limit theory of sovereign rating as flawed. Specifically, the Western theories regard the credit rating of the central government of certain country as the upper limit of all its debtors. However, there is no connection between the two ratings. As a result, incorrect ratings are generated by this widely applied method. Nonetheless, western rating theories serve as a conclusion and analysis of the experiences of a century, which provide valuable references for future practices.
4. Reforming global rating system
In October 2008, Dagong for the first time proposed to reform the international rating system on the Tokyo Rating Forum of China, Japan and South Korea, followed by several theoretical publications including China's Rise Needs Powerful National Credit Rating Agency, Building a New International Credit Rating System, The Strategic Choice of the Chinese Credit Rating System and On Credit Crisis. With these books, Dagong has provided for three years for the reform of international rating system.
On 24th October 2012, the press conference for the Universal Credit Rating Group (UCRG), jointly established by three non-sovereign rating agencies from China, the US and Russia, was held in Beijing. The UCRG was officially founded on 25th June 2013 and aims at shouldering the responsibility of international ratings. It provides another option for the international market and can be considered as the best choice to reform the international rating system.
5.Revealing the intrinsic demand of credit rating
For the intrinsic demand of credit rating, Dagong has achieved the following innovations: 1) as a specific entity in the market, rating needs to prioritise public responsibility. General principles of market competitions incorporated into rating would be against public interest due to the resulted unfair competitions over ratings; 2) the fundamental principle for the relationships between creditors and debtors lies in the fact that the creditor recognises the risk of debtor through ratings. Since the creditor enjoys the authority in terms of credit ratings, it is considered against the principle if the debtor has dominant influences on ratings which would become a subsequent tool used to transfer interests; 3) rating agencies fulfils its public responsibility by providing impartial information to the market. Whether it has an innovative system of rating theories and its capability to establish criteria plays a decisive role. It should be the only standard to ‘rate’ a rating agency.
6.Exploring the model of building a society-wide credit system
It was by developing the theories on the laws of credit-based socio-economic development that Dagong discovered the service demand concering the building of China’s credit system for the first time. Following the discovery, Dagong made pioneering achievements in theory and practice.
Society-scoped credibility management and credibility-based social management are what Dagong has concluded from its exploration of the development laws of China’s credit system. To build such a system, efforts should conform to the laws of social management which are formed based on society-scoped credibility management, and integrate credit management into social management. According to this theoretic achievement, Dagong has produced the Blueprint for Building China’s Credit System, which identifies the target, direction and path of developing the model of building China’s credit system.
Under the model designed by Dagong, China’s credit system would be a society-wide credit management system which centers on urban areas. In this system, cities are administrative units, around which various elements of modern society are gathered; every member of society is the carrier of credit information whose social activities constitute the system of credit information flows in the city; also, each member is both the creator and user of credit information. On the basis above, China’s credit system would be built. Dagong believes that the model of building China’s credit system should be to build a system in each city for the collection, processing and utilization of credit information to ensure that credit information is exchanged and shared all across the city. This model is also fundamental to the nation-wide interconnectivity of credit information.
7.Building Asian Credit System
On 9th October 2013, Prime Minister Li Keqiang put forward the proposal of building the credit system in Asia on the 16th ASEAN Conference in China. The State Council officially approved Dagong to lead the implementation of this national strategy in the following November. A month later, Dagong submitted the Proposal of Building Asian Credit System to the concerned authorities, and relevant works are being carried out according to the plan.
8. Building European and Asian Credit Rating System
In June 2013, Dagong Europe was approved by the EU regulatory authorities for carrying out its business in the European rating market. In April 2014, Dagong Hong Kong was granted the rating qualification certificate by the Securities and Futures Commission of Hong Kong, which marked that Dagong has entered the European and Asian rating market. Dagong’s strategy in Europe and Asia is as follows: with its Chinese background, Dagong will promote efficient capital flows across borders through impartial rating information, in an effort to help Dagong Ratings generate new impetus for the economic growth in Europe and Asia.
9.Building Credit Knowledge System
On 20th May 2014, Dagong proposed to establish the Credit Education Alliance with more than 20 universities including Peking University and Tianjin College of Finance and Economics. The Alliance is dedicated to seize the important opportunity to meet the demand for credit education in the credit-based economy. It aims to incorporate production, education and research to establish an international credit education platform and a credit knowledge system. It also plans to organise a research team of international credit scholars and introduce credit knowledge to the community.