(Reuters) – Ratings agency Moody’s lowered its outlook on China’s credit rating to “negative” from “stable” on Tuesday, citing weaker economic growth in the medium term and continued contraction in the real estate sector.
Moody’s, which has an “A1” rating on China’s long-term debt in local and foreign currencies, points to growing financial support for heavily indebted local governments and state-owned enterprises, raising risks for the budgetary, economic and institutional solidity of the country, according to the agency.
The world’s second largest economy is struggling to recover from the COVID-19 epidemic while the hoped-for recovery after the lifting of health restrictions is proving sluggish. The country remains faced with a serious real estate crisis and a slowdown in the global economy.
“The change in outlook also reflects increased risks from structurally and continually weaker medium-term economic growth and continued contraction in the real estate sector,” Moody’s said.
Moody’s expects China’s annual economic growth to slow to 4.0% in 2024 and 2025, and reach an average of 3.8% between 2026 and 2030. The Chinese government this year set a target growth in gross domestic product (GDP) of 5%.
The Chinese Ministry of Finance said Tuesday it was disappointed by Moody’s downgrade, assuring that the economy would continue its rebound and that risks linked to the real estate sector and local government debt were controllable.
(Reporting by Gnaneshwar Rajan in Bangalore and Kevin Yao in Beijing; Blandine Hénault for the , editing by Kate Entringer)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
