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Moody's lowers China outlook to negative

by ChemOrbis Editorial Team -
  • 04/03/2016 (11:35)
According to media reports, Moody’s lowered its outlook for Chinese government debt to negative from stable due to uncertainty regarding possible economic reforms, rising government debt and falling reserves.

Moody’s cited include the ongoing weakness in Chinese’s fiscal metrics, the continuing drop in foreign exchange reserves and a lack of confidence in the authorities’ capacity to initiate economic reforms as the reasons for their negative outlook.

The credit agency also added that they expect government debt to increase further in the years ahead and that they could further cut China’s rating if the pace of reforms needed to support sustainable growth slows. However, Moody’s maintained China’s Aa3 rating, claiming that the country’s sizeable reserves give it time to implement reforms and gradually address economic imbalances.

Meanwhile, another rating agency, Fitch, reported that the Chinese banks have higher risks stemming from accelerating credit growth.
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