MADRID, 10 Abr. (EUROPA PRESS) -
The credit rating agency Fitch Ratings has confirmed the 'A' solvency grade as an issuer of China's long-term debt, but has worsened the rating outlook to 'negative' from 'stable' in the face of growing risks to public accounts. of more uncertain growth expectations for the Asian giant.
"The revised outlook reflects growing risks to China's public finances as the country faces more uncertain economic prospects amid a transition from property-dependent growth to what the government views as a more sustainable growth model." , the agency explained.
Fitch argues that large fiscal deficits and rising public debt in recent years have eroded fiscal buffers from a credit rating perspective while warning that "fiscal policy is increasingly likely to play an important role in support growth in the coming years," which could keep debt on a steady upward trend.
In this sense, it points out that fiscal stimulus is being intensified, as Beijing seeks to offset economic obstacles, with Fitch predicting that the deficit will increase to 7.1% of GDP in 2024 from 5.8% in 2023, which which would represent the largest adverse budget imbalance since 2020.
Likewise, Fitch warns of uncertainty regarding the consolidation path, with a gradual reduction in the deficit. "There is little clarity on reform measures to support fiscal consolidation in the medium term," underlines the agency, for which the central government is likely to continue assuming a broader fiscal role to support investment priorities.
On the other hand, the risk rating agency anticipates that Chinese public debt will increase to 61.3% of GDP in 2024 from 56.1% in 2023, which implies "a clear deterioration of 38.5% in 2019, when the debt was well below the median of its peers", mainly due to sustained fiscal support to counter economic pressures, while by 2025 it expects the debt ratio to rise to 64.2% and to almost 70% by 2028.
In terms of growth, Fitch forecasts GDP expansion to moderate to 4.5% in 2024, from 5.2% in 2023, due to persistent weakness in the real estate sector and moderate household consumption, as a result of the negative wealth effects of the real estate correction and somewhat slow income growth.
However, the agency predicts that growth will remain around 4.5% until 2028 - higher than its rating peers - supported by large manufacturing and technology sectors, high investment and urbanization. However, it warns of notable downside risks, including uncertainties around economic transition, demographics, declining productivity, abrupt changes in regulatory policies and geopolitical risks, especially related to trade and investment flows.
