By Martin Gøttske
Moody’s Investors Service has cut China’s credit ratings for the first time in nearly 30 years – from Aa3 to A1 – amid worries over mounting debt.
Moody’s says it expects the financial strength of the Chinese economy will erode in coming years as growth slows and debt continues to rise.
The development is a challenge to the view that China’s leadership will be able to rein in credit risks in the financial system, while ensuring there’s enough lending to keep the economy at the desired growth rate of at least 6.5 per cent this year.
China’s Finance Ministry has responded to the downgrade, saying Moody’s is exaggerating the risks to the Chinese economy.
South China Morning Post: