Fitch downgrades China's credit rating outlook
Kyiv • UNN
Fitch has downgraded China's credit rating outlook to negative, citing risks to public finances as the economy faces challenges in transitioning to new growth models.
The international rating agency Fitch has lowered its outlook on China's credit rating to negative, citing risks to public finances as the economy faces growing uncertainty in the transition to new growth models. This was reported by Reuters, according to UNN.
Details
It is noted that in December 2023, China's rating was also downgraded by Moody's as Beijing intensifies efforts to stimulate a weak recovery from Covid through fiscal and monetary support.
The revision of Fitch's outlook reflects the more difficult situation in China's public finances, due to the double whammy of slowing growth and rising debt,
The analyst noted that this does not mean that China will default in the near future.
Although the agency lowered the rating outlook from "stable" to "negative", indicating the possibility of a downgrade in the medium term, the agency affirmed China's rating at "A+".
S&P, another major global rating agency, also gave China an A+ rating, equivalent to Moody's A1 rating.
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Fitch predicts that China's economic growth will slow to 4.5% in 2024 from 5.2% last year, while the International Monetary Fund expects China's GDP to grow by 4.6% this year.
Addendum
According to a report by the National Institute for Finance and Development (NIFD), China's debt-to-GDP ratio rose to a new record of 287.8% in 2023 in January, up 13.5 percentage points from a year earlier.
After Fitch's decision, China's Ministry of Finance said it regretted the rating decision, promising to take measures to prevent and eliminate risks associated with local government debt.
Recall
China will increase its defense budget for 2024 by 7.2% to 1.67 trillion yuan ($230.6 billion) and will emphasize reunification with Taiwan.