Fitch reduces Chinese sovereign debt to spend and definitions

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Fitch classification agency has reduced China’s sovereign debt classification on concerns about the weakest financial parts and the impact of high definitions on exports, a move that led to accusations of bias from Beijing.

In a statement on Thursday, Fitch said that its long -term classification in the long term from A+ to A based on predictions that were presented to US President Donald Trump’s announcement on Wednesday about the “additional” mutual treatment ” Definitions From 34 percent on Chinese goods.

Fitch said her step reflects the expectations of this China It would be severely increased in spending to support economic growth and shrinkage pressure amid the increasing definitions that will weigh external demand.

“This support, in addition to structural corrosion at the revenue base, is likely to maintain the high financial deficit,” the agency said, adding that it expects that “continuing the gross domestic product” will expect the percentage of government debt “its sharp trend in the next few years.”

The China Finance Ministry condemned what he said was a “biased” reduction.

“The Chinese economy has a stable basis, many advantages, strong flexibility and great potential,” the ministry said in a statement, adding that the “long -term favorable” conditions and “the general trend of high -quality economic development” have not changed.

China is not a heavy source of foreign currency debts, as most of its bonds were priced in Renminbi. A Issuing 2 billion dollars in the Kingdom of Saudi Arabia In November last year, waves were made due to the huge demand for investors and the fact that Beijing managed to borrow at a cheap price like the United States in dollars.

On Wednesday, the Ministry of Finance raised 6 billion yuan (823 million dollars) by issuing the first green sovereign bonds in London, an offer that had been overlooked nearly seven times, according to a statement issued by the Bank of China, one of its shepherds.

Fitch Reduce her view of Chinese credit classification To a negative of stable in April last year, citing the increasing interests of debt as Beijing tries to turn into new growth models.

The agency said on Thursday that its view was now stable, despite the uncertainty about the influence of the new Trump tariff, because there was a “room in the current classification to accommodate the potential effects on economic growth and financial standards.”

Beijing believes that he needs to issue more government debts as part of the efforts made to increase the Chinese economy.

The Ministry of Finance said: “China will continue to implement a more active financial policy and a loose monetary policy.”

Moody investor service Reducing Chinese credit expectations to negativity In December 2023, quoting increasing risks of economic growth in the middle of the period continuously and overcoming the crisis in the real estate sector.

Alan von Mehrin, a Chinese economist at Dansky Bank, said the Chinese bond market is dominated by local players who are unlikely to be affected by the cutting of Fitch classification.

He said: “China has a very high level of savings that need a house and many of them go to bonds across banks and pension funds.” “The Popular Bank of China will also reduce policy and increase liquidity by reducing the rates of reserve requirements, so there will be large money to buy bonds to finance debt.”