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Equitable credit ratings key to global governance

Reporter: Michelle Van den Bergh 丨 CCTV.com

07-18-2016 16:45 BJT

The Universal Credit Rating Group and Dagong Credit agency gathered at the World Credit Rating Forum today (Monday) in Beijing to discuss the impact of credit ratings on the global economy, the forecasting of a second possible global credit crisis and other issues.

Since the 2008 financial crisis, rising global debt has increased the risk of another credit crisis. The gap between global debt and wealth created continued to widen in 2015.

Total debt globally was three times its GDP, 2.7 times GDP for the US and 3.6 times for the EU countries. Heavy debt has become a drag on global growth and has led us into an era of high risk and low expansion.

"Global debt has gone up drastically. Total debt has increased 40 percent since the 2008 financial crisis, but global GDP has gone down 40 percent. That will trigger another credit crisis at some point and this time, it will be even worse than the last one," said Guan Jianzhong, chairman of Universal Credit Rating Group. 

The credit rating system plays a decisive role in influencing the global economy. Experts say that a balanced input is needed from the global rating agencies in order to incorporate equitable credit ratings into the global economic governance system.

Leaders and experts also point out that a credit-based social system in China is significant to the world. The system will serve as a model for similar efforts in Asia, especially in the "Belt and Road" countries. It will also continue to fundamentally influence the global economic governance system.

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