Fitch, an international credit rating agency, lowered the outlook on China's sovereign credit rating to "negative". China's Ministry of Finance responded today with regret and pointed out that Fitch's rating failed to effectively reflect the positive role of China's fiscal policy in promoting economic growth and stabilizing the macro-leverage ratio.
The Hong Kong Economic Daily reported that Fitch Ratings announced that it maintained the A+ rating for China's issuer default rating, but the rating outlook was changed from "stable" to "negative". Fitch is another international rating agency that has changed China's credit rating outlook to "negative" after Moody's.
Fitch's latest report stated that the negative outlook reflects the increasing risks to China's public finances. Although the government's goal is to shift from relying on real estate development to a more sustainable growth model, the increase in fiscal deficits and government debt is eroding the fiscal buffer zone. Fitch believes that the Chinese government must continue to use fiscal policy to support growth, which will keep debt on an upward trend in the next few years and potential debt risks may also increase.
The official website of the Ministry of Finance of China today released a "Reporter's Question" in the name of the relevant person in charge on issues related to Fitch's downgrade of the outlook for the sovereign credit rating.
