China’s debt binge has unsettled one of the world’s top credit ratings agencies.
Standard & Poor’s said Thursday it has downgraded China’s rating one notch, warning that “a prolonged period of strong credit growth has increased China’s economic and financial risks.”
The move is likely to come as an unwelcome irritant for Chinese President Xi Jinping as he tries to project strength and stability ahead of a major meeting of Communist Party leaders next month.
Related: China has a huge debt problem. How bad is it?
Worries about the high levels of debt in the world’s second largest economy, particularly among companies, are hardly new. Economists, investors, the International Monetary Fund and even China’s central bank chief have been warning about it for years. S&P’s announcement adds another high-profile name to the list.
“This won’t be news to anyone who has kept half an eye on China over recent years and shouldn’t change anyone’s thinking,” said Mark Williams, chief China economist at Capital Economics.
