IC Markets

China Not Happy with Credit Rating Downgrade by S&P

Flag of ChinaOn 21st of September 2017, the favourite global rating firm Standard & Poor’s (S&P) has downgraded the sovereign rating of China for the first time since 1999. It has been done because of the growing debt and increasing financial risk.

Standard & Poor’s said that the economy of China could be halted by increasing debt and financial system might not be able to move forward. This rating firm is the second agency that has downgraded the rating of China after Moody’s Investors Service downgraded China’s score in May this year.

S&P has also decided to downgrade the rating of Hong Kong on 22nd September thereby downgrading it to AA rating from AAA. It stated that the slowdown in China is having a negative impact on Hong Kong.

The rating firm, however, said that Hong Kong has a credible policy, positive economic outlook and strong fiscal reserves but the downgrade of China had to reflect on Hong Kong’s rating because both the parties are linked with each other politically and institutional wise.

ARIRANG NEWS

The sovereign credit rating downgrade of China did not come at a perfect time for President Xi Jinping. He is preparing for the twice a decade meeting with the important members of the Community Party. The meeting is likely to take place on 18th October 2017, and everyone is hoping that the President would be again re-elected for another five years.

The President of China has made it one of the most critical priorities in 2017 to minimise the debt risk and stop the capital outflow. The downgrade of credit rating does not speak highly of the efforts taken by the President in spite of the fact that the revenue of government has increased by 10% and economy registered 6.9% growth in the past nine months.

Moody’s Investors Services’ downgrade in May was objected by the Finance Ministry, and they have also voiced their criticism for S&P’s downgrade. The downgrade was verbally opposed by the Finance Ministry who further posted a remark on its website which read

The Standard & Poor’s downgrade of China’s sovereign credit rating is a wrong decision. This misreading neglects China’s good fundamentals and development potential.

The Finance Ministry further commented that S&P’s decision to downgrade the country’s credit rating is quite confusing because the economy is firm and government can ensure the financial stability of China. The government of China is expected to continue their focus on issues like capital outflow, credit risk and overall financial supervision in the nation.

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China Not Happy with Credit Rating Downgrade by S&P
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China Not Happy with Credit Rating Downgrade by S&P
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On 21st of September 2017, the popular global rating firm Standard & Poor (S&P) has downgraded the sovereign rating of China for the first time since 1999.
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Top10FX.net
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Steven Rudford

Steven Rudford

Hello, my name is Steven Rudford. Welcome to Top10FX.net. Follow my website for the most trustworthy Forex broker reviews and last minute financial trading news.


IC Markets

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