Moody's downgrades China's credit rating

waltky

Wise ol' monkey
Feb 6, 2011
26,211
2,590
275
Okolona, KY
Granny checkin' the prices of her rickshaw stocks...
icon_redface.gif

Moody's downgrades China's credit rating
May 24, 2017 -- Moody's Investors Service reduced China's sovereign credit rating on Wednesday, citing the country's rising debt and slowing economy.
The international bond credit rating service downgraded China's credit rating one degree, from Aa3 to A1, and changed its outlook, a one-word term describing Moody's expectations, from "stable" to "negative." The demotion indicates the bond rating firm regards China's capacity to meet financial commitments is "strong," as opposed to "very strong." China now has the same credit rating as Japan, Saudi Arabia and Israel. It was the first time since 1989 that Moody's lowered its expectations regarding China.

Moodys-downgrades-Chinas-credit-rating.jpg

Moody's Investors Service downgraded China's sovereign credit rating by one degree on Wednesday, from Aa3 to A1, citing expectations the country's financial strength will erode as debt rises and its economy slows. The photo depicts the business district of China's financial capital, Shanghai.​

A Moody's statement said the downgrade reflected its "expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt and the consequent increase in contingent liabilities for the government." It added that it expects government borrowing levels to increase.

China's ratio of national debt to gross domestic product is 250 percent, a figure among the highest in the world. The government spends heavily to support its economy, and there are concerns that private sector banks have overextended themselves in loans. Some cities, including Shanghai and Beijing, are experiencing a real estate bubble, in which home prices increased by 25 percent or more between 2015 and 2016.

Moody's downgrades China's credit rating
 
China's Labor force Fraction has been unofficially shrinking for more than a decade due to very young ages for retirement. Officially the labor force has been shrinking for 4-5 years so Chinese growth will shrink for at least the next 12 years.
 

Forum List

Back
Top