China’s Credit Woes

by | Sep 25, 2017

Ratings agency Standard & Poor’s have officially downgraded China’s credit rating amid fears rising debts are adding to economic risks.

The agency lowered China’s sovereign rating by one notch to A+ from AA-. This is the second downgrade from a major ratings agency for China this year and comes at an awkward time before October’s Communist party congress.

Other economic watchdogs like the International Monetary Fund have warned that China is focusing too much on creating impressive annual growth numbers at the expense of quality economic output, indicating that they are using a credit-fuelled economic strategy which has major risks in the long run (like another potential financial crisis).

China’s total debt has quadrupled since the financial crisis to hit $28tn (£22tn) at the end of last year.

 

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