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Moody’s affirms China’s A1 rating, maintains stable outlook

Moody’s Investors Services announced on Monday that it reaffirmed China’s A1 rating with a stable outlook.

“Over the longer term, China’s credit strengths reduce risks related to ongoing tensions between the US and China,” Moody’s noted, as reported by Reuters. “China rating affirmation, stable outlook supported by assessment that strength of institutions and governance support the sovereign’s capacity to mitigate credit risks.”

Additional takeaways

“Over the longer term, china’s credit strengths reduce risks also related to the reshaping of global supply chains and demographic pressure.”

“China’s growth potential is under pressure from a number of sources. Starkest pressures on China’s growth potential are domestic, arising from long-term demographic pressures on China’s labour force.”

“In the near term, China’s institutional capacity combines with financial buffers by domestic savings and foreign exchange reserves to offset credit negative consequences of the pandemic.”

“China’s economy is expected to grow by only 1.9% this year, before 7% growth in 2021.”

“Judgment remains that China’s policymakers will succeed over time in containing erosion in growth.”

Market reaction

The market mood remains upbeat and the S&P 500 futures were last seen gaining 1.2% on the day.

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