Moody’s downgraded its outlook on China’s government credit ratings
It's been some time since my last update (just got back from a 2 weeks vacation in Japan, also I got engaged haha!) - but something caught my attention and I had to share it with y'all!
Moody's has just changed its view on China's financial health from stable to negative, less than a month after doing the same for the United States. To them, the Chinese government's support for local governments and state-owned businesses might weaken the country's overall financial and economic strength. However, Moody's still keeps China's "A1" rating for long-term bonds.
Does Moody’s have a point here? The agency predicts China's yearly economic growth will slow down to 4% in 2024 and 2025, and then average 3.8% from 2026 to 2030, eventually dropping to 3.5% by 2030.
Does Moody’s have a point here? The agency predicts China's yearly economic growth will slow down to 4% in 2024 and 2025, and then average 3.8% from 2026 to 2030, eventually dropping to 3.5% by 2030.
Their worries are nothing but China's increasing debt and its impact on the growth of the economy. Beijing will likely need to provide more support to debt-laden local governments and state firms, which poses risks to China's fiscal, economic, and institutional strength. They also take into account the risk of their problematic property sector.
As expected, China's Finance Ministry expressed disappointment with Moody's decision, saying that their worries about China's economic growth and financial stability are not necessary. They argue that despite global challenges, China's economy continues to recover and develop steadily.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
- YouTube finance content creator (>50k subs)
- Specializes in US stock and ETF investments
- Huge fan of Tech companies
17KFollowers
5Following
32KVisitors
Follow
stephen mullins : hay congrats
and may it be long and lasting.