rating agency Fitch warns Beijing – L’Express

rating agency Fitch warns Beijing – LExpress

Rating agency Fitch has lowered China’s sovereign credit outlook to negative, the agency announced on Wednesday, April 10, citing increased risks for the country’s public finances.

“The revised outlook reflects growing risks to China’s public finances as the country faces a more uncertain economic outlook,” the agency said in a press release. “Significant budget deficits and rising public debt in recent years have eroded fiscal reserves from a rating perspective,” the agency warned.

“Fiscal policy is increasingly likely to play an important role in supporting growth over the coming years, which could keep debt on a steady upward trend,” she added.

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The Chinese Ministry of Finance reacted quickly, deeming this decision “regrettable”. “The results show that the indicator system of Fitch’s sovereign credit rating methodology failed to effectively and proactively reflect Beijing’s efforts to promote economic growth,” the ministry said in a statement. communicated.

Prolonged crisis in the real estate sector

But Fitch affirmed China’s credit rating at ‘A+’, a move the agency said reflects the country’s “large and diversified economy, its GDP growth outlook still strong relative to peers, its integral role in global merchandise trade, its robust external finances, and the yuan’s reserve currency status.”

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Chinese authorities are working to revive the world’s second-largest economy by battling a series of headwinds, including a prolonged crisis in the real estate sector, soaring youth unemployment and weak global demand for Chinese goods. Last month, Beijing set an economic growth target of 5% for 2024, an ambitious goal that leaders admitted would be difficult to achieve.