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BBC Chinese: Moody’s Changed China’s Debt Outlook to Negative

BBC Chinese recently reported that Moody’s Investors Services, the well-known international credit ratings organization, changed the outlook from stable to negative on China’s government credit ratings. Moody’s explained that the decision was based on the ongoing and rising government debt, a continuing fall in reserve buffers due to capital outflows, and also on the uncertainty about the authorities’ capacity to implement reforms to address imbalances in the economy. In the past one and one-half years, China’s foreign exchange reserve declined by US$762 billion. Moody’s report also pointed out that the Chinese economy is still facing the risk of a continued significant slowdown due to high debt level having a suppressing effect on business investments. Moody’s expects the government debt level will continue to grow rapidly. [Editor’s note: One day later, Moody’s also changed the rating outlooks for 38 of China’s state-owned enterprises (SOEs) to negative.]
Source: BBC Chinese, March 2, 2016