Fitch agency downgrades China’s sovereign debt to negative outlook – 04/10/2024 – Market

The rating agency Fitch downgraded China’s sovereign debt to a negative outlook due to the increased risks to the Asian country’s public finances, the company announced this Wednesday (10).

“The outlook revision reflects rising risks to Chinese public finance forecasts as the country faces more uncertain economic prospects,” Fitch said.

“Large fiscal deficits and the increase in public debt in recent years have eroded fiscal reserves from a rating point of view,” warned the agency.

He added that “it is increasingly likely that fiscal policy will play an important role in supporting growth in the coming years, which could keep debt on a steady upward trend.”

China’s Ministry of Finance called the decision “regrettable.”

“From the results, it can be seen 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.

Fitch, however, confirmed this Wednesday China’s credit rating at “A+”, a decision that, according to the agency, reflects the country’s “large and diversified economy, the still solid prospects for growth in the GDP relative to its peers, the integral role in global trade in goods, robust external finances, and the reserve currency status of the yuan.”

Chinese authorities are struggling to stimulate growth in the world’s second-largest economy, which faces several obstacles, such as the prolonged crisis in the real estate sector, high unemployment among young people and fragile external demand for its products.

The country in March set a 5% economic growth target for 2024, an ambitious goal that the government admitted will be difficult to achieve.