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Moody's subjective analysis goes awry

By Mei Xinyu ( China Daily ) Updated: 2017-05-27 07:23:00

Moody's Investors Service has lowered China's sovereign credit rating from Aa3 to A1, and upgraded the country's outlook from "negative" to "stable". But the changes will not have as much impact on China as on other emerging markets that heavily rely on foreign debt for financing.

The international rating agency has erred on three fronts. First, Moody's has overestimated China's reliance on stimulating policies to stabilize its growth, and underestimated the country's resolve to restructure its economy.

The credit rating agency predicts that China will continue to implement stimulating policies to maintain its economic growth, which will aggravate the overall debt pressure. But the fact is, China has been making efforts to transform its economic development model and promote innovation to maintain steady growth. The fast rise of emerging industries and the economic data for this year show Moody's prediction is not based on facts.

Moody's subjective analysis goes awry

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