China Rating Outlook Cut at S&P on Risk of Slower Rebalancing

Standard & Poor's slashed China's credit rating outlook on Thursday to negative from stable as the country's economic rebalancing is expected to proceed at a slower than previously expected pace. Bloomberg, citing Standard & Poor's report, noted that China's AA-long term credit rating has been slapped with a negative outlook. The rating agency expressed concerns that the economic and financial risks to the Chinese government's credit worthiness is "gradually increasing." "This follows our belief that, over the next five years, China will show modest progress in economic rebalancing and credit growth deceleration," Bloomberg quoted Standard & Poor's as saying. The rating agency also suggested that China's economy will grow by at least 6 percent per year over the next 3 years. "They are just reiterating the potential risks that we already know," Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. told Bloomberg. "It seems like S&P are playing catch up and I doubt we will see any significant impact on markets. If anything we'll probably see some government-linked media fighting back in the coming days."