S&P downgrades China credit outlook to ‘negative’

Standard & Poor’s Ratings Services cut Thursday its outlook on China to negative from stable, saying the country’s “economic rebalancing” is likely to progress more slowly than expected.

“We revised the outlook to reflect our expectation that the economic and financial risks to the Chinese government’s creditworthiness are gradually increasing,” the credit agency said.

“This follows from our belief that, over the next five years, China will show modest progress in economic rebalancing and credit growth deceleration,” it added.

S&P kept its AA- rating on China, arguing the country’s government is taking steps to bolster its economy. “Most importantly, we view the government’s anti-corruption campaign as a significant move to improve governance at state agencies and state-owned enterprises,” it said.

The S&P report came out after Chinese markets closed on Thursday. The Shanghai Composite Index SHCOMP, +0.11% ended the day up 0.1% at 3,003.92.

Source: MarketWatch