S&P: China view to negative

Standard & Poor’s said it revised the outlook on the People’s Republic of China to negative from stable.

The agency also said it affirmed the country’s AA- long-term and A-1+ short-term sovereign credit ratings.

S&P also said it affirmed its cnAAA long-term and cnA-1+ short-term Greater China regional scale ratings. The transfer and convertibility risk assessment on China is AA-.

The outlook revision reflects an expectation that the economic and financial risks to the Chinese government’s creditworthiness are gradually increasing, the agency said.

Over the next five years, China will show modest progress in economic rebalancing and credit growth deceleration, S&P said.

The country’s government and corporate leverage ratios are likely to deteriorate and the investment rate could be well above what is believed to be sustainable levels, the agency said.

These expected trends could weaken the Chinese economy’s resilience to shocks, limit the government’s policy options and increase the likelihood of a sharper decline in trend growth rate, S&P said.

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