S&P Lowers China’s Rating; Outlook Stable

S&P Global Ratings downgraded China’s sovereign ratings citing higher economic and financial risks emanating from prolonged period of strong credit growth.

The sovereign rating was lowered to A+ from AA-, the agency said Thursday. The outlook on the long-term rating was stable.

The rating agency said the stable outlook reflects the assessment that China will maintain its strong economic performance and improved fiscal performance over the coming three to four years.

S&P observed that claims by depository institutions on the resident non-government sector have increased rapidly since 2009.

Although this credit growth had contributed to strong real GDP growth and higher asset prices, the agency said it has diminished financial stability to some extent.

Despite government measures, S&P foresee the credit growth in the next two to three years to remain at levels that will lift financial risks gradually.

The ratings on China reflect S&P’s assessment of the government’s reform agenda, growth prospects, and strong external metrics.

The agency forecast China’s economic growth to remain strong at close to 5.8 percent or more annually through at least 2020.
Source: RTT News