Link Securities| Credit rating agency Fitch said, after maintaining its “A+” rating on China and lowering the outlook to “negative” from “stable”, that its review reflects the growing risks to China’s public finance outlook, as the Asian country faces greater uncertainty in its economic outlook, in an environment of transition from property-dependent growth to what the Chinese government envisions as a more sustainable growth model.
In addition, Fitch noted that large fiscal deficits and government debt have eroded fiscal buffers. The review projects that fiscal policy is likely to be increasingly supportive of growth, which is on a sustained upward trend. Lower nominal growth exacerbates the challenges of managing indebtedness. Still, the “A+” credit rating is based on its large and diversified economy, solid GDP growth forecasts relative to its comparables, an integral role in global goods trade, robust external finances and the current state of its yuan reserves.
