Chinas Präsident Xi Jinping. Lintao Zhang
Moody’s cut its credit outlook for Chinese government bonds to negative on Tuesday.
The rating agency justified this with the stagnating growth and the ongoing real estate crisis in the country.
Beijing has launched economic stimulus programs and increased borrowing to support the struggling economy.
Moody’s on Tuesday cut its outlook for China’s credit rating, dealing another blow to the world‘s second-largest economy.
The rating agency said in a statement Explanation announced that it would maintain its A1 rating for Chinese government bonds, but lower the outlook from “stable” to “negative”.
Moody’s cited stagnant growth and a seemingly never-ending housing crisis as factors that could hurt Beijing’s ability to repay its debts.
“The change in outlook also reflects the increased risks associated with structurally and persistently lower medium-term economic growth and the ongoing downsizing of the real estate sector,” the ratings agency said.
China is struggling to restart its economy in 2023 after three years of strict zero interest rate policy. The growth figures are below the experts’ expectations.
Moody’s expects the country’s gross domestic product to grow by just four percent in 2024 and 2025 and by an average of 3.8 percent over the rest of the decade.
Policymakers are also struggling to contain the housing crisis. It brought two major real estate companies – Evergrande and Country Garden – to the brink of collapse because they could not repay their bonds.
One of China’s largest banks has banned its employees from writing negative analyzes about the country’s economy
Beijing has responded to these crises with economic stimulus packages and increased borrowing. The budget deficit is now higher than it has been in more than 30 years – and local governments have also taken on more debt.
China’s finance ministry hit back at Moody’s. In one Explanation It said it was “disappointed” by the rating agency’s downgrade of its outlook, adding that the economy “will be very resilient and has great potential.” „Bloomberg“ translated.
The Chinese yuan traded flat against the US dollar on Tuesday. This year it has fallen by over three percent against the dollar.
China’s most important stock index, the CSI 300, fell almost two percent by the close of trading, extending its total losses for 2023 to over twelve percent.
This article was translated from English by Jonas Metzner. You can read the original article here read.
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