Powered by MOMENTUM MEDIA

S&P downgrades China’s credit rating

By Tim Stewart
 — 1 minute read

Concerns about the rapidly increasing levels of household debt in China has prompted a sovereign credit rating downgrade from S&P Global Ratings.

S&P Global Ratings has lowered its sovereign credit rating on China from A+/A- to AA-/A-1+, reflecting concerns about increasing economic and financial risks.

The main worry for S&P is the "prolonged period of strong credit growth" that is rising faster than income growth.

Advertisement
Advertisement

"Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent," said S&P.

While the ratings agency noted efforts by the Chinese authorities to rein in corporate leverage, it was concern that credit growth will remain at current levels for the next two to three years.

"The ratings on China reflect our view of the government's reform agenda, growth prospects and strong external metrics. On the other hand, we weigh these strengths against certain credit factors that are weaker than what is typical for similarly rated peers," said S&P.

The ratings agency added that China has lower average income, less transparency and a more restricted flow of information than its global peers.

 


The must-attend event for financial advisers is back in 2022: the ESG Summit, coming to Sydney and Melbourne in February. Walk away with vital knowledge on a number of key ESG areas to help you make informed ESG strategy decisions and to better communicate and integrate the growing ESG space to clients. Visit the website to secure your place.

 

S&P downgrades China’s credit rating
investordaily image
ID logo

 

related articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.