Standard & Poor's (S&P) has affirmed the mainland's long- and short-term foreign-currency credit ratings in light of its rich foreign exchange reserves and high savings rate. But outlook on its long-term ratings remains negative, because of deteriorating economic conditions and declining political support for economic restructuring. The agency also affirmed the BBB-plus long-term foreign currency counterpart and senior unsecured ratings for the State Development Bank of China. S&P said the mainland's long-term forex sovereign and senior unsecured credit ratings were maintained at BBB-plus. Its short-term forex credit ratings were at A2, meaning it was more susceptible to adverse effects of economic changes, but had satisfactory capacity to meet financial commitments. S&P said the forced closure of Guangdong International Trust and Investment Corp (Gitic) had underlined the 'asset quality problems' of non-bank financial institutions and Beijing's resolve to contain their financial risks. However, market confidence in the institutions was weakened due to uncertainties regarding 'the ultimate extent of central government support and the timing of debt repayment'. 'While a timely and transparent resolution of Gitic's liabilities could establish a precedent for liquidating other potentially troubled institutions and partly alleviate creditor concerns, the external liquidity of non-sovereign borrowers is likely to remain under strain in the short term,' the agency said. Foreign banks have tightened credit to mainland firms, in view of higher risks as Beijing is not prepared to guarantee the firms' debt repayments. S&P said the mainland's credit ratings were supported by its rich foreign exchange reserves which were 300 per cent more than short-term debts, while debt servicing was expected to be less than 30 per cent of exports this year. Its high savings rate at 40 per cent of gross domestic products allowed commercial banks to maintain good access to domestic liquidity. But creditworthiness was constrained by the potentially high social cost of state-sector reforms due to the economic slowdown and therefore exacerbated the banks' non-performing loan problem. It was also restricted by an inflexible political system, which has not been liberalised, despite sweeping economic reforms, S&P said.