Competition among China's credit-rating agencies is intensifying, leading to a slide in standards reminiscent of what happened in the U.S. before the financial crisis, according to Dagong Global Credit Rating Co.

China's onshore bond market faces the possibility of its first default, with Shanghai Chaori Solar Energy Science & Technology Co. having warned this week it may not be able to make an 89.8 million yuan ($14.7 million) interest payment due today. The solar-cell maker sold 1 billion yuan of five-year debt in March 2012, and the notes were rated AA, the fourth-highest investment grade, by Pengyuan Credit Rating Co. when they were issued. The debt was subsequently downgraded twice, most recently to BBB+ in April 2013.

"China's rating system has problems similar to those in the U.S. in 2008," Guan Jianzhong, the Beijing-based chairman of Dagong, said in a phone interview yesterday. "There's cut-throat competition, and it's not about who accurately evaluates the risks, but comes down to prices and ratings."