Beijing rebuts credit rating downgrade
China rebutted international rating agency Moody's downgrading of the country's credit rating on Wednesday, saying the company overestimated the difficulties facing the world's second-largest economy and underestimated the effect of its restructuring reforms and financial strength. Analysts said Moody's has been too pessimistic to appropriately assess China's debt management.
Moody's Investors Service announced its downgrading of China's long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative.
"The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economywide debt continuing to rise as potential growth slows," according to a Moody's statement. "While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economywide debt, and the consequent increase in contingent liabilities for the government."