Chinese Finance Ministry Responds to Fitch Ratings Downgrade
China's Finance Ministry expresses disagreement over Fitch's credit rating downgrade, emphasizing the economy's resilience.
The Ministry of Finance of China has formally expressed its regret and disagreement with Fitch Ratings' recent decision to downgrade the country's sovereign credit rating from 'A+' to 'A'.
In a statement released late Thursday, the ministry described the downgrade as 'biased' and argued that it fails to objectively reflect the actual resilience of China's economy and the prevailing consensus in global markets regarding its recovery prospects.
Fitch's downgrade, issued on the same day, cited anticipated continued weakening in public finances and rising levels of debt as the primary reasons behind the rating revision.
Notably, Fitch recognized China's strong economic growth potential and its central role in global trade, as communicated in discussions with Chinese officials.
The Ministry of Finance contended that Fitch's evaluation does not fully take into account China's current situation compared to other countries with comparable ratings.
It emphasized a consensus in both international and domestic markets regarding the ongoing recovery and improvement of China's economic landscape.
Economist Wang Qing, Chief Macroeconomic Analyst at Golden Credit Rating International, questioned the legitimacy of Fitch’s rationale, stating that concerns surrounding fiscal health and debt are not adequate grounds for such a downgrade.
He asserted that a sovereign credit rating should more accurately reflect a government's actual capacity to fulfill its debt obligations.
In response to the evolving economic environment, the Chinese government announced plans to implement a more proactive fiscal policy alongside a moderately accommodative monetary policy.
Wang noted that although these initiatives may lead to increased government debt in the short term, they are designed to bolster economic growth, thereby enhancing the country's debt repayment capabilities.
China's gross domestic product (GDP) reached 134.9 trillion yuan (approximately $18.52 trillion) last year, reflecting a 5 percent growth rate, positioning it among the fastest-growing major economies globally.
The Ministry of Finance stated that China's economic foundations remain stable, citing advantages such as a favorable talent landscape, capital accumulation, and technological advancements.
It reiterated that the longstanding favorable conditions and the momentum for high-quality economic development persist.
Moreover, the ministry highlighted the role of favorable production factors, structural transformation, the emergence of new economies, continued urbanization, and market-oriented reforms in sustaining growth.
Plans are underway to enhance fiscal policy coordination across several sectors, including monetary, employment, industrial, regional, and trade, to further support high-quality economic development.
In light of these developments, major global institutions like the International Monetary Fund and the World Bank have recently revised their 2025 growth forecasts for China upwards, indicating a renewed optimism within international capital markets toward Chinese assets.
In a statement released late Thursday, the ministry described the downgrade as 'biased' and argued that it fails to objectively reflect the actual resilience of China's economy and the prevailing consensus in global markets regarding its recovery prospects.
Fitch's downgrade, issued on the same day, cited anticipated continued weakening in public finances and rising levels of debt as the primary reasons behind the rating revision.
Notably, Fitch recognized China's strong economic growth potential and its central role in global trade, as communicated in discussions with Chinese officials.
The Ministry of Finance contended that Fitch's evaluation does not fully take into account China's current situation compared to other countries with comparable ratings.
It emphasized a consensus in both international and domestic markets regarding the ongoing recovery and improvement of China's economic landscape.
Economist Wang Qing, Chief Macroeconomic Analyst at Golden Credit Rating International, questioned the legitimacy of Fitch’s rationale, stating that concerns surrounding fiscal health and debt are not adequate grounds for such a downgrade.
He asserted that a sovereign credit rating should more accurately reflect a government's actual capacity to fulfill its debt obligations.
In response to the evolving economic environment, the Chinese government announced plans to implement a more proactive fiscal policy alongside a moderately accommodative monetary policy.
Wang noted that although these initiatives may lead to increased government debt in the short term, they are designed to bolster economic growth, thereby enhancing the country's debt repayment capabilities.
China's gross domestic product (GDP) reached 134.9 trillion yuan (approximately $18.52 trillion) last year, reflecting a 5 percent growth rate, positioning it among the fastest-growing major economies globally.
The Ministry of Finance stated that China's economic foundations remain stable, citing advantages such as a favorable talent landscape, capital accumulation, and technological advancements.
It reiterated that the longstanding favorable conditions and the momentum for high-quality economic development persist.
Moreover, the ministry highlighted the role of favorable production factors, structural transformation, the emergence of new economies, continued urbanization, and market-oriented reforms in sustaining growth.
Plans are underway to enhance fiscal policy coordination across several sectors, including monetary, employment, industrial, regional, and trade, to further support high-quality economic development.
In light of these developments, major global institutions like the International Monetary Fund and the World Bank have recently revised their 2025 growth forecasts for China upwards, indicating a renewed optimism within international capital markets toward Chinese assets.
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