Rating Agency Moody’s Downgrades its Outlook on China’s Debt

Chinese government debt is causing concern to Moody’s. The rating agency has downgraded its outlook on that debt to ‘negative’ from ‘stable’.

The reason is uncertainty over Beijing’s’ capacity to carry out economic reforms, coupled with rising government debt and falling foreign currency reserves. Those reserves have shrunk by $762 billion (702 billion euros) over the last 18 months.

“Without credible and efficient reforms, China’s GDP growth would slow more markedly as a high debt burden dampens business investment and demographics turn increasingly unfavorable. Government debt would increase more sharply than we currently expect,” Moody’s said. 

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Source: Euronews