Moody 's is changing the outlook for credit rating to negative, citing risks associated with "structural and persistently low medium-term economic growth" and ongoing challenges in the real estate sector.
Moody's expressed concerns about China's future prospects, citing growing concerns about the country's creditworthiness. Key factors include financial support for local governments and businesses, high local government debt due to declining land sales, and financial problems in China's "shadow banking" sector. In addition, the country faces problems due to a declining population, which could lead to a budget deficit and higher debt.
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Slower growth, weaker demographics
Moody's forecasts that China's annual economic growth rate will slow to 4% in both 2024 and 2025, averaging 3.8% per year from 2026 to 2030. Factors such as weaker demographics could lead to a reduction in potential growth of about 3.5% by 2030. China is forecasting growth of about 5% this year. Moody's maintains its long-term A1 sovereign.
China's Ministry of Finance expresses disappointment over Moody's decision, but China's economy continues to recover.
Source: edition.cnn.co
