The Chinese entity of US firm Fitch Ratings has been approved to enter China's credit rating market as part of the partial trade deal with the United States, China's central bank said Thursday.

The People's Bank of China (PBOC) said that Fitch Bohua will be able to conduct ratings in China's interbank bond market, marking a further step in opening the industry.

This makes Fitch Ratings the second foreign credit rating agency approved to enter the Chinese market, after S&P Global received the go-ahead early last year.

"Fitch's entry into China's credit rating market is another proactive step taken by China to expand its financial sector's opening to the outside world," said the PBOC.

The central bank added that this is "also a concrete implementation of the phase one US-China economic and trade agreement".

"In the next step, the PBOC will... guide credit rating agencies to play a greater role in preventing and mitigating financial risks, as well as improving the financing environment for private and small- and medium-sized enterprises," it added.

The US firm said in a statement that Fitch Bohua was a "separate and independent company", wholly owned by Fitch Ratings.

"We are confident that market participants will value our independent analysis, transparent methodologies and rigorous ratings process in line with international best practice," said Danny Chen, chief executive of Fitch Bohua.

The US and China have been trading barbs over the coronavirus pandemic, which has dealt a severe blow to global economic growth and cast doubt over the fulfilment of the phase one trade deal inked in January.

Chinese imports plunged in April, with observers noting that shipments from the US remain below levels needed to achieve the terms of the trade accord.

The phase one deal, which marked a truce in a bruising trade war, involved Beijing agreeing to boost purchases of US goods and services by $200 billion over two years.

But it also includes Beijing's commitment in other areas, such as to continue allowing US service suppliers to rate domestic bonds sold to domestic and international investors.

US President Donald Trump has ruled out renegotiating the agreement signed with China.

Last week, Vice Premier Liu He, who had led China's negotiations, also spoke by phone with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and confirmed that both sides agreed to implement the first phase of the deal.

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