Best World Practices in Credit Reporting and Data Protection: Lessons for China1

China has experienced tremendous growth in consumer credit over the past years. One important question is how to preserve a healthy credit sector while at the same time stimulating further economic growth. Credit reporting systems are a crucial part of the vital development of consumer credit markets — they are highly sophisticated in the industrialized countries. However, currently there is no international consensus on the best practices for the regulation of this industry. For China, this question is of great importance, since the adoption of presumably inadequate data protection standards may interfere with EU trade relations. This paper reviews the progress in credit reporting in China as well as its legal foundations and possible reforms. The Chinese case is discussed in the context of a review of credit reporting systems and their regulation in 17 other countries. Moreover, we include standards set by international contracts such as the OECD Guidelines, the UN Guidelines for Privacy and the EU Data Protection Directive. The U.S. approach as well as the EU approach to the regulation of credit reporting are contrasted with some interesting insights. Based upon this background and the historical experience in industrialized countries, paths for legal reform in China are discussed.