Moody’s changed the outlook on China’s credit ratings from stable to negative

The international rating agency Moody’s Investors Service has downgraded its outlook on China’s credit rating from stable to negative. The long-term forecast for the country’s sovereign bonds remains at A1, writes Bloomberg with reference to the agency’s report.

The change in outlook, according to Moody’s report, reflects increased structural risks, as well as a decline in economic growth in the medium term. The rating agency notes the strengthening of fiscal policy in China and the increase in government debt. This is a concern as the country’s authorities previously spoke of record bond issuance in 2023, Moody’s reports.

The rating agency expects GDP growth to slow to 4% in 2024 and 2025 and average 3.8% between 2026 and 2030. In October, China’s National Statistics Administration reported that China’s economy grew by 4.9% year-on-year from July to September 2023.

Moody’s last cut China’s credit rating in 2017 from Aa3 to A1. European rating agency Scope Ratings in its September report reportedthat China’s sovereign debt will exceed 100% of GDP by 2027.

Read more about the Chinese economy in the Kommersant article. “China exceeded expectations”.

Petr Buzlaev