The Chinese Ministry of Finance condemned the report by Fitch Ratings, which maintained its sovereign debt rating at A+, but downgraded its future outlook from positive to negative. The ministry stated that "China's deficit is at a moderate level, and risks are under control." Fitch estimated that the risks facing China's public finances are increasing as Beijing works to address the growing issue of local and regional government debt and moves away from a heavy reliance on the struggling real estate sector to drive economic growth.
However, while the slowdown in growth exacerbates the challenges of adapting to heavy borrowing, Fitch maintained China's A+ rating due to "its large and diverse economy, its vital role in global trade, and its vast foreign exchange reserves." The Ministry of Finance expressed that it is "regrettable" that Fitch downgraded its sovereign debt rating and missed its assessments, claiming it failed to consider Beijing's efforts to "improve the quality and efficiency of its government spending appropriately."
It added, "In the long term, maintaining a moderate deficit and the effective use of debt funds will help expand domestic demand and support economic growth, which will ultimately aid in keeping sovereign credit in a good position." The ministry also noted that "overall, the resolution of local government debts in our country is progressing in an orderly manner, and risks can generally be controlled."
