By The Financial District
Apr 111 min
Fitch cut its outlook on China's sovereign credit rating to negative on Wednesday, citing risks to public finances as the economy faces increasing uncertainty in its shift to new growth models, Joe Cash and Kevin Yao reported for Reuters.
Fitch expects China's general government deficit - which covers infrastructure and other official fiscal activity outside the headline budget - to rise to 7.1% of gross domestic product (GDP) in 2024 from 5.8% in 2023.
The downgrade follows a similar move by Moody's in December and comes as Beijing ratchets up efforts to spur a feeble post-COVID recovery in the world's second-largest economy with fiscal and monetary support.
"Fitch’s outlook revision reflects the more challenging situation in China’s public finance regarding the double whammy of decelerating growth and more debt," said Gary Ng, Natixis Asia-Pacific senior economist.
Fitch expects China's general government deficit - which covers infrastructure and other official fiscal activity outside the headline budget - to rise to 7.1% of gross domestic product (GDP) in 2024 from 5.8% in 2023, the highest since 8.6% in 2020.
At the time, Beijing's strict COVID curbs weighed heavily on the economy.
While it lowered its ratings to a negative outlook from "stable," indicating a downgrade is possible over the medium term, the agency affirmed China's issuer default rating at A+.
Fitch forecast China's economic growth would slow to 4.5% in 2024 from 5.2% last year, while the International Monetary Fund expects China's GDP to grow 4.6% this year, Ellen Zhang and Akanksha Khushi also reported for Reuters.