Weak economy: Moody's lowers outlook for China's credit rating
The recovery of the Chinese economy following the end of the strict coronavirus restrictions is making only sluggish progress, while the country's massive real estate sector is in crisis, consumer behavior is weak and foreign demand for Chinese products is also weak. Last year, the economy only grew by a weak three percent. This year, the leadership is aiming for around five percent - but this target is likely to be difficult to achieve.
The decision to downgrade the outlook now reflects the "growing signs" that state financial aid will be necessary for local governments and state-owned companies, Moody's explained. It also stands for the assumption of lower growth in the medium term and for the problems in the real estate sector. The sector has long been regarded as a pillar of the Chinese economy.
China's Ministry of Finance reacted "disappointed" to Moody's decision. The economy has recovered steadily since the beginning of the year despite a complex and difficult global situation. The rating agency's concerns regarding the economic outlook and financial policy of the People's Republic are "unnecessary".
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Source: www.stern.de
