China’s Ministry of Finance expressed strong disagreement with Fitch Ratings’ recent decision to downgrade the country’s sovereign credit rating. The ministry described the downgrade as “biased” and argued that it fails to reflect the actual resilience of China’s economy.
Fitch’s downgrade, announced on Thursday, reduced China’s credit rating from “A+” to “A”. Despite acknowledging China’s robust economic growth prospects and its central role in global trade, Fitch cited concerns about the country’s weakening public finances and rising debt levels.
In its statement, the Ministry of Finance emphasized that Fitch’s decision does not reflect the broad consensus in both international and domestic markets regarding China’s economic recovery. According to the ministry, China’s economic fundamentals remain strong, and its future growth potential continues to be supported by structural transformation, technological progress, and favorable factors like talent and capital accumulation.
The Ministry also criticized Fitch for not adequately considering China’s situation compared to other economies with similar ratings. It stressed that the country’s recovery and ongoing improvements in its economy should have been better factored into Fitch’s analysis.
Wang Qing, the chief macroeconomic analyst at Golden Credit Rating International, also rejected Fitch’s reasoning. He pointed out that the agency’s concerns about fiscal issues and rising debt are not sufficient grounds for the downgrade. Wang argued that sovereign credit ratings should be based on a government’s ability to repay debt, rather than simply its debt size.
China’s government has already implemented a more proactive fiscal policy, with plans for continued monetary accommodation. While this may lead to a higher government debt load, it is intended to stimulate economic growth and improve the country’s capacity to repay its obligations, according to Wang.
In 2024, China’s GDP grew to 134.9 trillion yuan ($18.52 trillion), with a 5% growth rate. This growth places China among the fastest-growing economies globally. The Ministry of Finance stressed that China’s economy is built on a stable foundation, with long-term potential supported by ongoing reforms and market-oriented changes.
Global institutions, including the International Monetary Fund and the World Bank, have recently raised their growth forecasts for China, further signaling optimism about the country’s future. Additionally, international investors are increasingly optimistic about Chinese assets.
