As leading global ratings agencies enter the Chinese financial sector with vigorous strides, local peers may feel pressure to maintain market shares. But the catchup strategy needs to begin with them getting their own house in order, according to analysts.

China's immature credit ratings industry will face fierce competition against the international giants, requiring a much stronger regulatory system to foster domestic high-quality services, they said.

Criticism clouded the industry last year, when the country's biggest four ratings companies - China Chengxin International Credit Rating, China Lianhe Credit Rating, Shanghai Brilliance Rating and Dagong Global Credit Rating, all received warnings from the regulators.

The regulators accused them of dishonest rating behaviors, which have posted higher degrees on some bonds and ignored potential default risks. Some of the agencies even received improper fees from clients that may result in conflicts of interest.

In China, regulations on ratings services need to be improved immediately, especially in terms of market access standards, information disclosure methods and to avoid interest conflicts, said He Jinbi, a deputy of the 13th National People's Congress and the president of Xi'an Maike Metal International Group.

He raised a proposal during the two sessions which concluded on Sunday, suggesting to build a national legislative framework for rating business and to streamline regulatory responsibility in different government departments.

"Compared with the world's leading ratings agencies, Chinese companies still have a long way to go to improve service quality," said He.

On Monday, a Fitch Ratings spokesperson told China Daily that Fitch (China) Bohua Credit Ratings Ltd, the foreign rating company's wholly-owned subsidiary in China, has filed an application with the central bank and the National Association of Financial Market Institutional Investors (for a license to rate onshore bonds in China's interbank market.

"We are communicating closely with the regulators as part of the application process," said the spokesperson. The move is a big step after the subsidiary was established in October, 2018, when the domestic market opening-up is accelerating.

Some foreign media reported on March 11 that Moody's Corp is pursuing a deal that would give it control of China Chengxin International Credit Rating, the nation's largest ratings company.

The report said the two companies have approached the People's Bank of China (PBOC) for feedback on the plan.

After one year's busy work, China's central bank governor Yi Gang showed his satisfaction on achieving his earlier pledge, when he announced a timetable in April 2018, listing 11 specific measures for further opening the country's financial sector.

According to a statement on the PBOC's website, China will continually open the credit ratings industry, and promote more international and qualified foreign ratings agencies entering the market. Regulations will be tightened, in bid to better support the financing needs of private and small companies.

The opening up will help to prevent industrial monopoly in the domestic rating sector, and push the local agencies improving service quality, said Zheng Zhigang, a professor at the Renmin University of China.

"Unified regulations and service standards should also be clarified to reduce illegal activities in the rating business," Zheng added.