China.com recently reported that major international rating agency Moody’s just downgraded China’s sovereign credit rating and expected its financial strength to weaken. The Chinese Ministry of Finance immediately responded that Moody’s had overestimated China’s challenges and underestimated the Chinese government’s capability to expand domestic demand. The Ministry suggested that Moody’s did not fully understand that the so-called “local government financing platform” and the debt that state-owned companies had would not actually increase the government’s debt. China’s primary news agency Xinhua also published a long commentary faulting Western rating agencies “traditional intent” to downplay China’s credit. Xinhua pointed out that the U.S. government fined Moody’s for “messing things up” during the financial crisis. Analysts of large Chinese commercial banks generally supported the government’s position and expressed the belief that Moody’s recent move was just business as usual and the impact would be very limited and marginal. China’s primary newspaper People’s Daily published a commentary as well. China’s own rating agency Dagong International questioned Moody’s motive and the timing behind its decision – China’s data in the past six months had just started showing a tangible recovery.
Source: China.com, May 24, 2017