Moody’s China outlook downgrade misses big picture: MOF

BEIJING, March 30 (Xinhua) — Credit rating agency Moody’s decision to downgrade the outlook for China’s sovereign bonds misses the bigger picture and has little impact on financial markets, the Ministry of Finance (MOF) said Wednesday.
Moody’s changed China’s credit rating outlook to negative from stable earlier this month, citing a weakening of fiscal metrics, a continuing fall in foreign exchange reserves and uncertainty over capability to implement economic reforms.
Rating firms should learn more about China’s economic and financial conditions to avoid information asymmetry, according to a statement released by MOF.
Domestic stock and bond markets, and the onshore and offshore yuan foreign exchange rate remained stable despite the downgrade, reflecting investors’ confidence and upbeat expectations of the Chinese economy, the statement said.
Meanwhile, balancing economic growth, structural reform and market stability is not a contradictory task — as claimed in Moody’s report — but a complementary process, MOF said.
Steady economic growth is the basis, pushing structural reform is the means to the end, and a stable financial market is a precondition to secure the sound development of the whole process, MOF pointed out.
Local government debt level and corporate leverage ratio are both below the international warning line and the government is taking active measures such as debt-for-equity swap to help ease debt pressure, the statement added.  Enditem

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