Dagong Global Credit Rating, one of China’s oldest and biggest rating firms, has been taken over by the central government after its mainland licence was suspended last year from the bond market business for “chaotic” management problems and providing “fake” information. China Reform Holdings, a central government-owned enterprise, said in a statement on Thursday that it has acquired a controlling stake in Dagong and will put it under a strategic restructuring. “It’s not simply a nationalisation of the credit rating firm,” the Beijing headquartered company said. “The state control has changed Dagong’s ownership structure from a single shareholder to a mixed structure and will improve its corporate governance. “The mixed ownership structure will help ensure Dagong’s independence as a third party rating agency.” Critics have raised concerns over whether China’s rating agencies are sufficiently independent from the companies they rate. Dagong, established in 1994, is one of China’s big four credit rating agencies. The firm grabbed the international media spotlight in 2011 when it downgraded the US credit rating to AA due to “debt risks”, lower than the AA-plus rating it assigned to China. Last year, Chinese regulators criticised the firm for charging high consultation fees on services to companies for which it also issued credit ratings. On August 17, the China Securities Regulatory Commission (CSRC) announced it would suspend Dagong from taking on new securities rating business for a year, and banned it from replacing senior management during the period. In a separate action on the same day, the National Association of Financial Market Institutional Investors (NAFMII), a supervisory group under the People’s Bank of China, said it would ban Dagong from rating debt-financing instruments for non-financial firms. The CSRC also cited Dagong’s “poor internal control” and “chaotic internal management”, while the NAFMII said the firm had provided “false” statements and “fake” information to the regulator. The restructuring of Dagong comes as Beijing tries to boost the domestic bond market to help provide funding for local governments and companies. A wave of corporate bond defaults by mainland companies in the past year included many that had been assigned high credit ratings by China’s domestic agencies. In March, the CSRC issued warnings to four credit rating agencies, including Dagong, and China Chengxin International Credit Rating. China Reform said in its statement on Thursday that initial restructuring moves have increased the proportion of experienced and qualified analysts at Dagong. “The credit rating industry is increasingly important to China’s economic health for its role in revealing credit risks, especially under the current environment that Beijing urges risk prevention in major areas,” the company said. In January, S&P Global Ratings received regulatory approval from the PBOC for entry into China’s credit rating market, becoming the first foreign rating agency to assess China’s domestic bond market. The move followed a commitment by Beijing in 2017 to allow US rating agencies into the country. The PBOC said in a statement the nation’s domestic rating agencies will improve the quality of their services in response to competition from international firms. The central bank also said it will continue to open up the industry to qualified foreign rating firms.