S&P wrong to downgrade China rating

LAST WEEK, the international credit rating agency Standard& Poor's downgraded its rating of China's long-term sovereign debt from AA-to A+, citing increasing risks due to an accumulation of debt. But that's unfair because S&P has failed to see China's huge potential. Ce.cn comments:

S&P is wrong to downgrade China's credit rating as it has misread the Chinese economy. According to mainstream economics, it is consumption that decides the level and size of an economy. China has huge consumption potential it can tap for sustainable economic development.

Second, S&P has failed to recognize the characteristics of China's financial system. Indirect financing accounts for the majority of China's financial system, and bank loans play the primary role. That is fundamentally different from Western economies, and means the financial risks are more controllable.