With the rating agency Dagong, Beijing wants to spread its financial vision of the world

The Chinese agency downgraded the rating of US sovereign debt from A + to A.

Far more severe than its Anglo-Saxon competitors, the Chinese financial rating agency Dagong degraded, on Wednesday, August 3, the note of the sovereign debt of the United States, echoing the Chinese worries: it made it fall of A + simple A; against AAA for US agencies, even though Standard & Poor’s and now Moody’s have placed this rating “in negative perspective” .

On Wednesday, the government news agency, China New, ruled that the lifting of the US public debt ceiling “does not effectively defuse Washington’s time bomb. ” More diplomatically, the governor of China’s central bank, Zhou Xiaochuan, calls on the United States to “keep the interests of other countries in mind. ”

Dagong makes a clean diagnosis after the adoption by the US Congress on Tuesday of text avoiding Washington’s default: “The growth of the US debt exceeds that of its economy.” For the Chinese agency, this posture – much more alarmist than that of its enemy sisters – is a way to highlight its alternative methods, at a time when Moody’s, Standard & Poor’s and Fitch are criticized. Especially if the idea of creating an agency on the European side matured, why not serve as a model, or collaborate afterward?

To listen to Dagong’s boss, Guan Jianzhong, in his office in eastern Beijing, it’s the grading system that has for too long been headed backwards: “Normally, it’s the one who lends which assesses the risk, but the United States is the most indebted on the planet and has the best ratings.They also have the agencies that rate all the states. ”

Since China has become the banker of the planet, with its 3,200 billion dollars (2,260 billion euros) of foreign exchange reserves, and that its companies invest worldwide, the conclusion is imposed by itself. even. The head of Dagong’s sovereign debt rating business, Lu Sinan, however, remains humble about the agency’s current influence: “Our reports do not yet have the power to change the market.”

Dagong was founded in 1994 and, among the five rating agencies operating in China, has a certain amount of credit with financiers. A western banker in China, however, explains that Asian investors are relatively insensitive to rating guidance and culturally more interested in the company’s image as well as in the yield on its debt.

It was only in the summer of 2010 that the agency embarked on the famous market of the evaluation of pay off the debt of the States- Katmandutrenton. Dagong employs 500 people. But, with only about twenty analysts, the office responsible for the sovereign rating remains limited. “We know 50 countries in 2010, 67 today, but ultimately we target all states,” says Lu.

In particular, the countries of Africa, “because they are important for China”. Financial institutions in Malaysia and Russia have also turned to Dagong. Others, American, “are curious about the methodology”.

By degrading the US debt again, the Chinese agency continues its distribution of slaps, started on July 11, 2010, when it published its first report on sovereign debt. The United States then left only AA, before falling, in November 2010, against a backdrop of monetary easing by the Federal Reserve (Fed), to a modest A +. The United Kingdom fell to the same level at the end of May.

At Dagong, France has rated AA – and placed under negative surveillance since June.

“The debt of France is not at a worrying level, reassures He Yi, the analyst who monitors the country’s finances.The problem lies in the weakness of growth as well as in the risk exposure of other states. European. ”

The recipe of the rating agency designed in China consists of an unprecedented weighting of the evaluation criteria. Guan explains that Dagong mainly looks at a state’s ability to control its economy, financial strength, and foreign exchange reserves. The brochure also mentions “the newly created social wealth”.

In fact, emerging countries are popular with them, especially China. Communist Party leadership, the growth of 9.5 percent and rising reserves of $ 1.7 billion a day rank the world’s second-largest economy among bright students, with stable AA +.

Everything in Dagong’s speech links its rise to that of China. It does not hesitate to celebrate in a statement the first anniversary of a speech by President Hu Jintao at the G20 summit in Toronto in June 2010, on the need to reform the system of rating the finances of the planet. As if both were playing on the same team. Moreover, when the regulator American refuses, in November 2010, the status of the officially certified credit rating agency on Wall Street, arguing the impossibility of supervising from abroad, Dagong bitterly denounces a “discrimination against the China”.

“Dagong is totally independent of the state in its shareholding,” says Guan Jianzhong, ” We must stop suspecting ourselves. ” Dare he, for example, to contradict the Chinese government’s audit office and write that his latest report underestimates the debt accumulated by the local authorities to be 375 billion euros, as Moody’s did on 5 July? The boss of Dagong responds with a new assault on its competitors: “Moody’s does not know, they just want to disturb China.”

Its novel methodology, which in fact rewards the dynamism of emerging countries, reflects a new reality, starting with the imbalance of US finances. But some regret that Dagong is first and foremost a Chinese alternative. “They seem to think that the separation between a rating agency and a government is in principle impossible, and therefore does not need to be tested, which, in the end, must mean something about their own rating guidelines, ” says a professor from a major Chinese university, on condition of anonymity.

“US rating agencies have not been afraid to assign execrable ratings to US states or cities, far less than Dagong, which is clearly lagging behind the market when ‘It’s about assessing risk in China,’ he says.