Moody’s Cuts China’s Credit Outlook to Negative | Mint
Active Stocks
Wed Feb 28 2024 09:29:00
  1. Tata Motors share price
  2. 974.75 1.25%
  1. Tata Steel share price
  2. 144.50 0.24%
  1. Power Grid Corporation Of India share price
  2. 292.40 -0.03%
  1. HDFC Bank share price
  2. 1,419.65 -0.06%
  1. ITC share price
  2. 410.65 -0.12%
Business News/ Economy / Moody’s Cuts China’s Credit Outlook to Negative
BackBack

Moody’s Cuts China’s Credit Outlook to Negative

wsj

Moody’s Investors Service cut its outlook on China’s government credit ratings to negative, citing concerns about slowing economic growth, local government debt and the country’s embattled property sector.

Moody’s said it expects the world’s second-largest economy to expand 4.0% in 2024 and 2025 before slowing to an average of 3.8% growth in the subsequent five years.Premium
Moody’s said it expects the world’s second-largest economy to expand 4.0% in 2024 and 2025 before slowing to an average of 3.8% growth in the subsequent five years.

Moody’s Investors Service cut its outlook on China’s government credit ratings to negative, citing concerns about slowing economic growth, local government debt and the country’s embattled property sector.

The ratings company lowered its outlook on Chinese government credit to negative from stable, a change that it said reflects rising evidence that the government will need to provide financial support to stretched local governments and state-owned enterprises, “posing broad downside risks to China’s fiscal, economic and institutional strength."

The revised outlook also reflects higher risks related to lower medium-term economic growth and the “ongoing downsizing of the property sector," Moody’s said in a statement Tuesday.

Moody’s said it expects the world’s second-largest economy to expand 4.0% in 2024 and 2025 before slowing to an average of 3.8% growth in the subsequent five years.

China’s gross domestic product rose 4.9% in the third quarter from a year earlier, down from a 6.3% increase in the second quarter. The country is struggling to fully emerge from the economic doldrums of the pandemic while working to contain a crisis in its heavily indebted property sector, one of the main drivers of its economy.

Moody’s maintained China’s A1 long-term local and foreign-currency issuer ratings, saying the country has the financial and institutional resources it needs and a track record of effective policy actions.

The Chinese Finance Ministry said it is disappointed by the outlook change. It called Moody’s concerns “unnecessary" and said the country’s economy is recovering.

The effect of a property-market downturn on local government budgets is “controllable and structural," the ministry said in a statement, adding that the proportion of local public budget revenue hasn’t dropped significantly even as tax income from the real-estate sector has declined.

“China’s economy is likely to sustain its rebound and positive trend for the fourth quarter, and China will remain an important engine for stable growth of the world economy," it said.

Write to Jiahui Huang at Jiahui.Huang@wsj.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App