This marks another major progress in China's efforts to restructure its financial systems compatible with international standards.

As part of the experiments, more than one million local citizens will be the first Chinese mainlanders to have their personal credit standing recorded, which will lay a foundation for the large-scale offering of mortgage loans by local banks.

The personal credit system is new to countries like China, which long had planned economies, and bank loans were inaccessible to individuals because they had no personal credit standing.

In recent years, some local banks have been allowed to grant mortgage loans to individuals for purchasing cars, houses and other things, but it has been very difficult and complicated for individuals to get loans from banks, despite the fact that local banks have a large sum of unused funds.

In July 1999, the Shanghai Credit Information Service Co. Ltd (SCIS) was set up, becoming the first of its kind in the People's Republic of China.

"The setting-up of a personal credit system is a triple integration of demands by the state, enterprises and individuals," said Shang Heping, general manager of the credit information company.

The issue is of great importance to the development of the entire national economy, he noted.

Some local experts observe that the state wants to spur the consumer market to develop the economy at a proper speed and get state enterprises out of trouble.

Meanwhile, the new generation of Chinese consumers are changing their viewpoint

on spending tomorrow's money on today's consumer goods, no longer seeing it as

a capitalistic way of life.

In recent years, Shanghai has witnessed the fastest growth of individual loan borrowing in China. In 1999, 680,000 people borrowed 54 billion yuan-worth of mortgages from local banks, compared with 15,000 people and 570 million yuan in 1995.

So far, 15 local banks have acquired membership of the board of directors of the

Shanghai Municipal Center for Personal Credit Information, a local supervisory and administrative organization.

Local citizens who have borrowed loans or used credits issued by these member banks will be among the first to have their personal credit standing put on file. The number of these trustworthy local residents has topped 1.8 million.

The member banks will send all their personal credit records to the data bank of the SCIS, and, beginning July 1, these commercial banks have been able to obtain the data bank's personal credit records about individual loan applicants by simply dialing a phone number.

In the next stage, the board plans to accept members from social security departments, the police, judicial bodies, industrial and commercial administrations, and tax bureaus, according to Feng Xiao, an SCIS official. The total number of local residents opening personal credit records is expected to reach six million to seven million.

The experiments have won a positive response from local banks. The Shanghai branch of the Industrial and Commercial Bank of China says it plans to provide local people with personal credit loans, while the Shanghai Pudong Development Bank (SPPB) has launched students' credit loans and increased the amount of overdrafts for its Dongfang (Oriental) credit card.

Local residents also support the trial move. A staff member of a foreign-funded firm, who only gave his surname as Lu, said, "It will no longer be so complicated for individuals to get loans from banks, if a personal credit system is set up. I'll cherish my credit as much as my life."

Following Shanghai, similar experiments are expected to be undertaken in other large cities in China, as part of the efforts to establish a personal credit system across the country, according to official sources.

(Xinhua)