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