Weak economy: Moody's lowers outlook for China's credit rating

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".

Read also:

• Buero.de will not save Galeria employees

1. Despite China's economy showing steady recovery since the beginning of the year, Moody's has lowered its outlook for China's credit rating, citing "growing signs" of necessary state financial aid for local governments and state-owned companies.
2. The Economic situation in China has been affected by the sluggish progress of the Chinese economy after the end of strict Coronavirus restrictions, a real estate sector in crisis, weak consumer behavior, and weak foreign demand for Chinese products.
3. Last year, China's economy only grew by a weak three percent, and the leadership is aiming for around five percent growth this year, but this target may be difficult to achieve due to these economic challenges.
4. Moody's decision to downgrade China's rating outlook also reflects the assumption of lower growth in the medium term and the problems in the real estate sector, which has long been considered a pillar of the Chinese economy.
5. The rating agency's concerns regarding the economic outlook and financial policy of the People's Republic have been met with disappointment from China's Ministry of Finance, who argues that the economic recovery has made steady progress despite a complex and difficult global situation.
6. The downgrade of China's credit rating by Moody's is a potential indication of the Weak moody's creditworthiness outlook for China, which could have broader implications for the country's economy and international financial markets.

Source: www.stern.de