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Standard & Poor's cuts China’s rating to A+ citing higher financial and economic risks

One of the top global rating agencies, Standard & Poor has downgraded China’s sovereign rating by one notch from AA- to A+ citing higher financial and economic risks. With this action, S&P’s rating on China came at par with the two other rating agencies, Moody’s and Fitch. Moody’s reduced China’s rating by one notch back in May this year. The announcement comes at a time when the United States under the Trump administration has started up taking a tough stance on Chinese imports that rely heavily on state subsidies, in order to reduce the trade imbalance between the two countries.

The rating agency said in a statement,

“The downgrade reflects our assessment that a prolonged period of strong credit growth has increased China’s economic and financial risks. Since 2009, claims by depository institutions on the resident nongovernment sector have increased rapidly. The increases have often been above the rate of income growth. Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

Chinese corporate sector liability has been a contentious issue for quite some time now, with many analysts expecting a blow-up. However, the government has so far managed to contain the damage.

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November 24 15:30 UTC Released

USECRI Weekly Index*

Actual

145.6 %

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Previous

145.6 %

November 24 14:45 UTC Released

US1st Half-Mth Infl YY*

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54.6 %

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54.6 %

November 27 09:00 UTC 29732973m

ITExport Prices*

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111 %

November 27 09:00 UTC 29732973m

ITImport Prices*

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116.1 %

November 27 14:00 UTC 32733273m

MXTrade Balance, $*

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-1.886 Bln USD

November 27 14:00 UTC 32733273m

MXTrade Balance SA*

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-1.559 Bln USD

November 27 15:30 UTC 33633363m

USDallas Fed mfg bus index

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27.6

November 27 21:00 UTC 36933693m

KRBOK Manufacturing BSI*

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87 Bln BRL

November 28 00:00 UTC 38733873m

BRCentral Govt Balance

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-22.725 Bln BRL

November 28 07:00 UTC 42934293m

DEGDP Growth QQ* Advance

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Forecast

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10.7 %

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