Recently, a senior official of the Ministry of Finance gave an interview to reporters on the outlook of China’s sovereign credit rating downgrade by Fitch.
It is regrettable to see that Fitch has lowered its outlook on China’s sovereign credit rating. We have had a lot of in-depth communication with the Fitch Ratings team in the early stage, and the report partly reflects China’s views. However, judging from the results, the index system of Fitch’s sovereign credit rating methodology failed to effectively forward-looking reflect the positive role of fiscal policy “moderately strengthening, improving quality and efficiency” in promoting economic growth and thus stabilizing the macro leverage ratio.
In the long run, maintaining a moderate deficit size and making good use of precious debt funds will help expand domestic demand, support economic growth, and ultimately help maintain sound sovereign credit. The Chinese government has always taken a holistic approach to the multiple goals of supporting economic development, guarding against fiscal risks and achieving fiscal sustainability. In light of changing circumstances, we have taken into account needs and possibilities, rationally arranged the size of the deficit, and kept the deficit-to-GDP ratio at a reasonable level. The 3 percent deficit-to-GDP ratio for 2024 is appropriate and reasonable on the whole, which will help stabilize economic growth and better control the government debt ratio, thus reserving policy space to cope with possible risks and challenges in the future.
In 2023, China’s GDP will grow by 5.2%, contributing more than 30% to the world economy. This year’s target of about 5% is in line with realistic conditions and development needs, and conveys our determination and confidence in high-quality development. The long-term positive trend of the Chinese economy has not changed, nor has the Chinese government’s ability and determination to maintain good sovereign credit.
Post time: Apr-17-2024