Fitch keeps China’s ‘A+’ rat­ing; warns over debt

Muscat Daily - - BUSINESS -

Bei­jing, China - Fitch Rat­ings warned on Fri­day that China’s grow­ing debt could trig­ger ‘eco­nomic and fi­nan­cial shocks’, but said it will main­tain the coun­try’s ‘A+’ rat­ing with a sta­ble out­look de­spite its concerns.

While China’s ex­ter­nal fi­nances were ro­bust and near-term growth prospects ‘favourable’, Fitch said ‘large and ris­ing debt lev­els’ in its non-fi­nan­cial sec­tor were a sig­nif­i­cant risk.

‘Over­all lever­age in the con­text of con­tin­ued ad­her­ence to am­bi­tious GDP growth tar­gets raises the po­ten­tial for eco­nomic and fi­nan­cial shocks’, it added.

In a pos­i­tive sign for China, cap­i­tal out­flows have “fallen sharply” since early this year and the cur­rent ac­count -- a key gauge of the econ­omy’s health - - re­mains in sur­plus.

But Fitch said tighter mon­e­tary con­di­tions could lead to slower growth next year of 5.9 per cent.

‘Macro-pru­den­tial reg­u­la­tions and tighter credit con­di­tions will, in Fitch’s fore­casts, re­sult in a slow­down in the hous­ing sec­tor and in­vest­ment spend­ing’, it said.

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