Moody's outlook pragmatic

PUBLISHED : Friday, 09 August, 2002, 12:00am
UPDATED : Friday, 09 August, 2002, 12:00am

Moody's Investors Service expects China to continue pragmatic economic reform policies despite the upcoming leadership changes.

'We recognise that China's leadership realises that economic reform will help to ensure future investment and growth - a position that was supported by China's accession to the World Trade Organisation,' said Moody's vice-president Thomas Byrne, author of the annual report on the country.

Regardless of the leadership changes that come out of the upcoming Communist Party Congress and next year's National People's Congress, Moody's expects a continuation of President Jiang Zemin's pragmatic economic reform policies.

Skilful policy management will be required to maintain social stability as China restructures its state sector and advances its modernisation drive, says Moody's.

Moody's has an A3 rating on the country's sovereign debt. The outlook for the rating, which has been in place since 1993, is stable.

It says the A3 country ceiling and stable outlook are due to China's large official foreign exchange reserves, moderate external debt, and the large foreign direct investment (FDI) that create a strong external payments position.

China's foreign exchange reserves reached an all-time high of US$242.76 billion at the end of June and officials expect this year's FDI to hit US$50 billion.

'China's closed capital markets add insulation to external shocks,' Mr Byrne said.