A recent report by Dagong Global Credit Rating Co Ltd on the world's sovereign credit status and its risks, is a significant step by a non-Western entity to break the long-established monopoly of Western ratings agencies over the global credit ratings business.

The report by China's first domestic ratings agency covered 50 countries whose gross domestic product (GDP) accounts for 90 percent of the world economy, and evaluated 27 countries differently from how Western rating agencies such as Moody's, Standard & Poor's (S&P) and Fitch have been doing.

In its report, Dagong gave some emerging and well-performing economies higher ratings than the three Western rating giants did. It also gave a comparatively lower rating to those slow-growing developed countries that have been bogged down in economic and debt troubles.

Due to its good economic performance in the context of the global financial crisis, China received a higher credit rating than the United States and some other Western countries, chiefly due to their worsening deficits.

China's local-currency rating was AA+ and foreign currency rating AAA, according to the Dagong report, both higher than those given by Moody's, S&P and Fitch. In its report, Dagong rated the US "AA" with a negative outlook both in its local as well as foreign currency.

In its report, Dagong mainly based its credit ratings criteria on different countries' comprehensive institutional strength and their fiscal conditions, with the former reflecting an economic entity's ability to guarantee wealth creation, an index that indicates its potential to create wealth and fiscal revenues in future, according to a manager of the agency's risks evaluation department.

Fiscal conditions reflect an economic entity's funding fluidity in future through comparing its revenues and debt status.

Dagong rated the 50 countries according to its own credit rating standards, which include the ability to govern a country, economic power, financial ability, fiscal status and foreign reserves, according to Guan Jianzhong, chairman of the non-governmental ratings agency.

Undoubtedly, China's current political and economic institutions ensure that it has far higher ability than the US in wealth creation and revenue collection. Beijing's fiscal conditions are also much better than Washington's, not just now but also likely in the years ahead.

A comparison between the two countries' GDP growth trends, foreign trade, international balance of payments, foreign reserves, their foreign debt and its structure, fiscal revenues and financial policies, all factors that influence a country's debt repayment ability, easily helped draw these conclusions.

Dagong's report is expected to help break the long-established monopoly of Moody's, S&P and Fitch over the global credit ratings market. For a long time, the credit ratings offered by the three have caused controversies across the world due to their lack of an independent, impartial, objective and scientific perspective.