4 Apr 2014
China keeps A+ credit rating from Fitch
FXStreet (Łódź) - Fitch Ratings announced on Friday its decision to maintain China's sovereign credit rating at A+, with a stable outlook. In the opinion of the agency the country's external balance sheet is strong enough to withstand the relatively small external debt burden.
“China's official reserves dwarf public external debt of USD34bn,” Fitch said in the official statement. “Sovereign net foreign assets were worth 44.1% of GDP at end-2013, the second-highest ratio among sovereigns rated in the 'A' range (those rated 'A-', 'A' and 'A+').”
Even though the ratings agency signaled that China's “structural economic challenge of rebalancing away from investment-led and credit-fuelled growth weighs on the credit profile,” it added however that “the state-led nature of China's economy endows the authorities with powerful levers for short-term demand management, which supports confidence in prospects for a smooth adjustment.”
Furthermore, Fitch pointed to the “ambitious” reform agenda announced for the first time at China's Communist Party's Third Plenum and developed at further policy meetings with “strong political commitment” as another factor supporting the ratings.
“China's official reserves dwarf public external debt of USD34bn,” Fitch said in the official statement. “Sovereign net foreign assets were worth 44.1% of GDP at end-2013, the second-highest ratio among sovereigns rated in the 'A' range (those rated 'A-', 'A' and 'A+').”
Even though the ratings agency signaled that China's “structural economic challenge of rebalancing away from investment-led and credit-fuelled growth weighs on the credit profile,” it added however that “the state-led nature of China's economy endows the authorities with powerful levers for short-term demand management, which supports confidence in prospects for a smooth adjustment.”
Furthermore, Fitch pointed to the “ambitious” reform agenda announced for the first time at China's Communist Party's Third Plenum and developed at further policy meetings with “strong political commitment” as another factor supporting the ratings.