Misjudgment of ratings agency

Moody's cut its credit rating outlook on China and the country's biggest banks from stable to negative in early March, citing rising debts, falling foreign reserves and an "inadequate capability to carry out reforms".

Moody's has exaggerated China's short-term volatilities, while ignoring the country's long-term economic soundness. When asked to comment on the downgrading at the China Development Forum in Beijing on Sunday, Chinese Minister of Finance Lou Jiwei responded: "We don't care much about the ratings". This indicates Chinese policymakers' confidence in the economy.

China has been under increased economic downturn pressures over the past year, but its economic indicators are still strong. China's still-admirable economic growth rate, its sound fiscal conditions and abundant foreign reserves, as well as its still relatively high interest rate level means it still has a big space to adjust its fiscal and monetary policies to boost economic development.