Fitch Revises China's Outlook to Negative, Affirms 'A+' Rating Amid Debt Concerns

Fitch Ratings has revised its outlook on China's sovereign credit rating to negative, citing increased risks to public finances and economic growth. The revision reflects concerns over China's rising debt and the uncertainty surrounding its shift to new growth models. Despite these challenges, Fitch affirmed China's 'A+' rating. The agency predicts China's GDP growth will moderate to 4.5% in 2024, down from 5.2% in 2023, and forecasts the general government deficit to increase to 7.1% of GDP by 2024, marking the highest deficit since the 8.6% recorded in 2020. Additionally, Fitch does not foresee prolonged deflation, projecting inflation rates of 0.7% by the end of 2024 and 1.3% by the end of 2025. In response, China's Finance Ministry criticized Fitch's rating system for failing to effectively reflect the positive impact of China's fiscal policy, expressed regret over the revision to a negative outlook, and highlighted debt fears.