China has transformed its economy with explosive growth. But the U.S. credit ratings agency, Standard & Poor’s, is concerned about the mounting debt used to fuel that expansion.
It’s taken China’s rating down a notch, from AA minus to AA plus.
CGTN’s Owen Fairclough reports.
Hong Kong also lost its triple A rating – the top score – S&P warning it would suffer a knock-on effect if China’s debts caused economic problems.
This doesn’t mean China and Hong Kong are in trouble – A ratings mean you can still meet your debts.
But China’s Finance Ministry nevertheless hit back, calling the downgrade the wrong decision. It insists China’s debts are manageable
“In the past half-year – even 12 months – we have seen a continued improvement in CHina’s macroeconomic data and corporate profitability. So many investors and observers are surprised by some of the positive improvements in China’s underlying economy,”
Liang Hong, chief economist for China International Capital Corporation, said.
Two of the three western ratings agencies have now downgraded China. But the U.S., France and the U.K. have all lost their triple A ratings in recent years.
President Xi Jinping has made curbing debt risk one of his priorities as he sets he sights on a second term at October’s Communist Party Congress.