S&P Affirms China's Sovereign Ratings at AA-/A-1+

Standard & Poor's Ratings Services affirms China's AA- long-term and A-1+ short-term sovereign credit rating, with the outlook being stable.


The sovereign ratings on China reflect the country's strong economic growth potential, robust external position, and the government's relatively healthy fiscal position, S&P said.


These strengths balance weaknesses related to China's lower average income compared with similarly-rated peers, a general lack of transparency, restricted information flows, as well as an economic policy framework that is still evolving to suit its largely market-based economy.


"We expect no major change in policy directions in China in the wake of the recent top leadership changes," S&P said in a statement. “Efforts toward deepening structural and fiscal reforms are likely to continue.”


S&P also expects the Chinese economy to continue its strong growth while the country maintains its large external creditor position in the next three to five years.


S&P projected China's per capita real GDP growth in 2013 to 2015 at 7.3 percent, less than the 10.2 percent average rate of the past five years. It expected China's high domestic savings to be more than sufficient to fund strong investment spending in the near future.


S&P said it may raise China’s credit rating if structural reforms lead to a “more vibrant” domestic debt capital market, more reliance on market-based macroeconomic management tools and a more flexible exchange rate.


The rating may be cut if reform efforts weaken, the nation’s economic performance becomes “markedly lower” and conditions in the banking industry worsen more than expected.

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