China's Credit Rating Downgraded

China's credit rating was downgraded from AA- to A+ by S&P after they released a statement saying its debts raised "economic and financial risks.

This decision by S&P makes China's rating the same as two other major credit rating agencies (Moody's and Fitch). The timing of the decision put it a month before the Communist Party Congress which occurs twice every decade and decides the economic policies for the country for the next five years.

In the second quarter of 2017 China's economy grew by 6.9% which beat the government's prediction of 6.5%. This growth is in part due to investment into infrastructure and property.

S&P stated that their downgrade reflects their "assessment that a prolonged period of strong credit growth has increased China's economic and financial risks" (statement was paraphrased). Claire Dissaux who is head of global economics and strategy at Millennium Global Investments told Reuters "China's credit problem is the biggest problem we have ver seen in any country and probably justifies a lower rating". She even went to say that China's rating might still be too good.




Link to original article here.