Standard & Poor’s lowered the rating outlook of the Chinese – Banker

Standard & amp; Poor’s lowered the rating outlook of China
 Republic of China from “neutral” to “negative.”

 
 

The reason for this decision were
 slow progress in “rebalancing” of the second world economy. Rating for China
 AA- been confirmed y.

 

“We have revised outlook
 (Chinese rating – ed. Ed.), Which reflects our expectations that
 Economic and financial risks to the credibility of the Chinese government gradually
 growing. This reflects our belief that within the next five years
 China will prove moderate progress in balancing the economy and the slowdown
 growth in credit “- said in a statement of reasons for its decision, analysts Standard
 & Amp; Poor’s.

 

Experts S & amp; P believe that
 Over the next three years, the Chinese economy will maintain a growth rate
 a level no lower than 6%. They are worried by this amount of leverage
 both the government and the corporate sector. “In our opinion
 investment rate may be significantly above the levels that we consider fit
 to maintain in the long term 30-35% of GDP “- reads the S & amp; P.

 

The key issue from the point of
 view of the agency is the future of political reforms in the PRC to increase “transparency”
 strengthening the rule of law and address the issue of state-owned behemoths
 industrial, which does not bear the consequences of the market (ie. bankruptcy
 or restructuring) of investment failure, resulting in an erroneous reallocation
 capital on a massive scale.
 

“ Our negative outlook is partly motivated by our
 opinion that the pace and scope of reforms of state-owned enterprises may be
 insufficient to weaken the risks associated with the growth model
 economic driven by credit “- warns Standard & amp; Poor’s.

 

For the last five years the rate of growth
 Chinese economy has been steadily decreasing. According to the official – though often
 questioned – data in 2015 China’s GDP grew in real terms by 6.9%, which was
 the lowest score in 25 years. Back in 2010, Chinese GDP grew at a rate of
 10.2%. The Chinese economy is characterized by a very high rate of investment
 (Almost 45% of GDP) and a high savings rate (47% of GDP), which
 the other side is a massive credit expansion organized by the mostly state
 banks.
 

The reduction in rating outlook
 China will automatically result in cutting rating outlook of Hong Kong (AAA) of
 neutral to negative.

 

Krzysztof Kolany