China: Moody’s confirms the rating, but puts the outlook negative
Even if the decision on the Chinese rating will have minimal impact, in fact practically nothing, it still has its informative weight.
.Moody's affirmed China's credit rating at A1 on Dec. 5, but revised the outlook from “stable” to “negative,” citing amplified risks arising from sustained, lower economic growth in the medium term and the country's ongoing restructuring. real estate sector .
Furthermore, concerns have arisen due to growing evidence of financial assistance granted by the government and the public sector generally to regional and local governments (RLGs) and financially distressed state-owned enterprises (SOEs), which pose significant downside health risks fiscal and economic stability of China and its institutional robustness. At the same time, however, if the central government did not intervene, the risks of local insolvencies would be enormously higher and adverse events potentially even more damaging.
Moody's also forecasts annual GDP growth of 4.0% for China in both 2024 and 2025, and we are talking about a GDP whose survey has recently raised doubts even among the Chinese authorities.
Standard & Poor's credit rating for China is A+ with a stable outlook. Fitch's credit rating for China was last upgraded to A+ with a stable outlook. DBRS' credit rating was A with a stable outlook. Now we need to see what the possible upcoming revisions of these certification bodies will be.
The rating does not have an immediate or important impact on Chinese debt, also because the external debt is rather limited, around 15% of GDP, and, although it has been growing in recent years, it seems to have stabilized:
In reality, the problems may be, above all, for the Chinese financial markets, which are suffering, as shown by the Chinese composite index:
We will see in the next few days how the markets will react.
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The articleChina: Moody's confirms the rating, but puts the outlook negative comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-moodys-conferma-il-rating-ma-mette-loutlook-in-negativo/ on Tue, 05 Dec 2023 13:41:13 +0000.