China's largest city, Shanghai, has issued a regulation to protect privacy in data collection for its individual credit files, a personal credit rating system that has created records on over a quarter of its residents since it was set up in 2000.

The regulation, the first of its kind in China, went into effect on Feb. 1 and outlaws the collection of nationality, racial,family background, religious and political beliefs, blood type, health and other personal information that is not related to a person's credit standing.

It rules that personal information should be subject to the person's approval before it is collected on his credit files, except for poor credit records such as deliberate delays of telecommunications, water, electricity and gas charges, overdraftsand defaults on loans.

The new regulation has also banned the collection of personal credit information by means of cheating, theft, bribery, intimidation or enticement, according to sources with the municipal information committee.

Shanghai is the only city on the Chinese mainland authorized tocollect personal credit information, and one in every four Shanghainese have their personal credit files recorded by an authorized credit information company.

Sources with Shanghai Credit Information Service Co. said the company had collected credit records on 3.6 million residents and over 600,000 enterprises in Shanghai.

Outstanding personal credit loans accounted for 12 percent of the total in the metropolis, much higher than the national average,of only 2 to 3 percent, says the company's General Manager Chen Zhiguo.

In an effort to ensure timely repayment of loans, Chen said hiscompany had joined with over 50 Shanghai-based universities to setup credit files for students who paid for higher education with loans.

The nation's capital, Beijing, has also set a timetable to establish an individual credit record system, as the Beijing BanksAssociation announced last year its member banks planned to collect credit records on individual applicants for bank loans to buy cars.

The association represents 21 Chinese banks and 18 overseas-funded banks operating in Beijing.

The banks are expected to have access to a planned credit information system on individuals with poor credit records involving bank cards, housing loans and individual loans before June 2004.

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