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China's debt rating improves
By Zhang Fengming |
November 12, 2010, Friday
|
Print Edition
Print Edition
MOODY'S Investors Service yesterday raised China's debt rating to its fourth highest ranking as it took into account the country's financial strength and resilient economy.
The rating firm yesterday raised the rating to Aa3 from A1, with a remaining positive outlook, citing China's resilient economy and strong growth forecast, strong government credit and effective management of possible losses arising from the record loans of 9.6 trillion yuan (US$1.4 trillion) in 2009.
"In particular, we premised our action on the ability of the Chinese authorities to protect systemic stability from the underlying threats arising from the extraordinary credit expansion evident in 2009," said Tom Byrne, a Moody's senior vice president.
China's economy grew 9.6 percent in the third quarter. Byrne said he expects China's economy to grow around 9 percent to 10 percent this year and perhaps 8 percent to 9 percent in 2011.
Moody's dismissed inflationary concerns in China as it said the government is managing them steadily.
"Although inflation is becoming a challenge, it currently remains moderate, and the People's Bank of China has taken tightening measures even as it normalizes monetary policy," it said.
The Consumer Price Index, the main gauge of inflation, rose 4.4 percent annually in October to a 25-month high, official data released yesterday showed.
China on Wednesday required banks to set aside more capital from lending to control liquidity, just a day before monetary and inflation data were released. Commercial banks will face a 50 basis point rise on reserve requirement ratio from next Tuesday. China surprisingly raised its interest rates on October 20, the first hike in nearly three years.
David Leung, wealth management general manager of Standard Chartered Bank (China) Ltd, said he expects three more rate hikes of 25 basis points each by mid 2011.
The rating firm yesterday raised the rating to Aa3 from A1, with a remaining positive outlook, citing China's resilient economy and strong growth forecast, strong government credit and effective management of possible losses arising from the record loans of 9.6 trillion yuan (US$1.4 trillion) in 2009.
"In particular, we premised our action on the ability of the Chinese authorities to protect systemic stability from the underlying threats arising from the extraordinary credit expansion evident in 2009," said Tom Byrne, a Moody's senior vice president.
China's economy grew 9.6 percent in the third quarter. Byrne said he expects China's economy to grow around 9 percent to 10 percent this year and perhaps 8 percent to 9 percent in 2011.
Moody's dismissed inflationary concerns in China as it said the government is managing them steadily.
"Although inflation is becoming a challenge, it currently remains moderate, and the People's Bank of China has taken tightening measures even as it normalizes monetary policy," it said.
The Consumer Price Index, the main gauge of inflation, rose 4.4 percent annually in October to a 25-month high, official data released yesterday showed.
China on Wednesday required banks to set aside more capital from lending to control liquidity, just a day before monetary and inflation data were released. Commercial banks will face a 50 basis point rise on reserve requirement ratio from next Tuesday. China surprisingly raised its interest rates on October 20, the first hike in nearly three years.
David Leung, wealth management general manager of Standard Chartered Bank (China) Ltd, said he expects three more rate hikes of 25 basis points each by mid 2011.
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