S & P plans to downgrade China – Jeune Afrique

 This decision means that S & amp; P may within six to 24 months to lower the long-term rating of the second largest economy, held for the moment “AA-”.

The rating agency Standard & amp <- aside article normal or folder -> ; Poor’s (S & amp; P) downgraded Thursday to “negative” against “stable” before, the prospect of changing the rating assigned to the sovereign debt of China, due to the rebalancing “slower than expected” of country’s economic model.

“This revision reflects our expectation of increased financial and economic risks” blunting the fiscal soundness of the Asian giant, the agency said in a statement.

“We believe that, over the next five years China will enter only limited progress in rebalancing its economy and deleveraging efforts,” she said.

Beijing boasts its strategy of rebalancing its economy towards services and domestic consumption at the expense of heavy industry, a sector weighed down by colossal overcapacity, outdated operation and massive debt.

maintained growth beyond 6% per year but debt galloping

While the S & amp; P expects that China’s GDP growth is maintained above 6% per year: so far, “the debt ratios of government and business are likely to rise, with an investment rate well beyond the sustainable level of 30 to 35% of GDP,” she says .

Beijing has officially set a growth target of at least 6.5% annually by 2020, and might be tempted to borrow excessively to achieve it, s alarm S & amp;. P

This would make the country more vulnerable to shocks and crises, while limiting its room for maneuver in terms of economic policy, estimated the agency

her rival Moody’s had already downgraded its outlook in early March on Chinese government bonds, also alarming the growing government debt and capital flight, while reflecting on the Beijing capacities to implement the expected economic reforms

At Standard & amp. Poor’s, the situation is similar: despite government promises, speed and depth of reforms to restructure large public companies, which dominate heavy industry and mining, are “insufficient to curb the dangers of credit growth doped “

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