Country’s credit rating dips on slowing growth and mounting debt, Beijing says downgrade overestimates risks
Moody’s Investors Service downgraded China’s credit rating Wednesday – from Aa3 (Double A-3) to A1 – saying it expects China’s economy to erode in coming years as growth slows and its debt burden continues to rise. The downgrade comes as the government faces new financial challenges after years of credit-fueled stimulus.
Craig Erlam, senior market analyst at foreign exchange firm Oanda, said the credit downgrade comes as no surprise. “Because talk of Chinese debt and concerns about the size of Chinese debt has been going on for the last few years. They seem to be very reliant on these high levels of growth, which has been slowing, ” according to Erlam.
China’s economy, the second largest in the world, grew 6.7 percent in 2016, down from 6.9 percent the previous year, the slowest pace since 1990. Erlam says the next few years could be challenging.
“They’ve [the Chinese government] talked about wanting to move away from an investment and export-led economy and focus more on domestic consumption and look at a more sustainable model.
