BEIJING, China — Ratings agency Fitch said Wednesday it had downgraded China’s sovereign credit outlook to negative, citing increased risks to the country’s public finances.
The “outlook revision reflects increasing risks to China’s public finance outlook as the country contends with more uncertain economic prospects”, it said in a press statement.
“Wide fiscal deficits and rising government debt in recent years have eroded fiscal buffers from a ratings perspective,” the agency warned.
It added that “fiscal policy is increasingly likely to play an important role in supporting growth in the coming years, which could keep debt on a steady upward trend”.
Beijing’s finance ministry swiftly said the decision was “regrettable”.
READ: Moody’s cuts China credit outlook to negative
“From the results, it can be seen that the indicator system of Fitch’s sovereign credit rating methodology has failed to effectively and proactively reflect” Beijing’s efforts to promote economic growth, it said in a statement.
But Fitch affirmed China’s credit rating at “A+”, a move it said reflected the country’s “large and diversified economy, still solid GDP growth prospects relative to peers, integral role in global goods trade, robust external finances, and reserve currency status of the yuan”.
Chinese officials are struggling to kickstart the world’s number two economy as they battle a range of headwinds, including a prolonged property sector crisis, soaring youth unemployment and weak global demand for the country’s goods.
READ: China says economy grew 5.2% in 2023
Policymakers have in recent months announced a series of targeted measures as well as a major issuance of billions of dollars in sovereign bonds, aimed at boosting infrastructure spending and spurring consumption.
And Beijing last month set an economic growth goal of five percent for 2024, an ambitious objective that leaders admitted would be a challenge to meet.