Moody’s cuts China credit outlook to negative on rising debt

  • Moody’s lowered its outlook to negative from stable while retaining a long-term rating of A1 on the nation’s sovereign bonds.
  • China’s usage of fiscal stimulus to support local governments and its spiralling property downturn is posing risks to the nation’s economy, the credit ratings agency said.
  • Beijing pushed back soon after the outlook change was announced, saying it was “disappointed” with Moody’s decision and the nation’s economy “will be highly resilient and has large potential”.
  • The impact of the property downturn is well under control, the Finance Ministry said in a statement.
  • Moody’s last cut its credit rating on China in 2017, to A1 from Aa3, on the likelihood of a material rise in economy-wide debt and the impact that would have on state finances. That was its first China debt downgrade since 1989.

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