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Uh Oh…Is Economic Collapse In China’s Future?

Standard & Poors lowered its view of China’s creditworthiness, less than a month ahead of the country’s most important and sensitive political gatherings.

S&P downgraded China to A+ from AA-, a one notch change. It also changed its outlook for the country’s credit rating from negative to stable, implying that investors should not expect further downgrades in the near future.

“The downgrade reflects our assessment that a prolonged period of strong credit growth has increased China’s economic and financial risks,” S&P said in a statement.

Moody’s Investor Service had downgraded China to a similar rating in May. Fitch downgraded China four years ago.

The Chinese economy expanded at a 6.9 percent rate in the first half of the year, according to official statistics. That was faster than the Chinese government’s growth target and has prompted concerns that China’s debt-fueled expansion may be harder to control than expected. Many outsiders are skeptical that China will act to rein in credit growth at the expense of economic growth.

The downgrade comes at a particularly awkward time for China’s leaders, just weeks ahead of China’s Communist Party Congress. The twice-a-decade event is expected to see changes in key leadership roles and announcements of new policy priorities.

(via: Breitbart)

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