China's finance minister accuses credit rating agencies of bias
Lou Jiwei says downgrades don’t reflect nation’s economic reality
China’s finance minister accused international credit-rating companies of “bias” against the country after Standard & Poor’s Rating Services and Moody’s Investors Service lowered their sovereign outlooks on the world’s second-largest economy.
“Historically, the market performance of most of China’s sovereign debt was higher than the assessment of the credit-rating agencies,” Lou Jiwei said at a press briefing in Washington on Friday after a Group of 20 meeting. “That means there’s bias.”
The March downgrades did not reflect China’s “economic reality,” and the first quarter’s 6.7 per ent growth rate was still very high, Lou said.
While the pace was slower than last year, it was expected and in line with China’s target range of 6.5 per cent to 7 per cent, according to Lou.
Standard & Poor’s cuts China, Hong Kong sovereign credit outlook to negative from stable
He said Beijing was also taking measures to control the increase and size of local government debt, a concern cited by Moody’s and Standard & Poor’s.
Lou’s comments were China’s strongest against the credit-rating agencies, after the ministry last month said they underestimated the country’s ability to handle any economic risks.
Standard & Poor’s reduced the outlook for China’s AA- long-term credit rating to negative from stable in March, following a similar move by Moody’s earlier in the month.
Economic officials have repeatedly tried to calm investors’ concerns over the nation’s outlook and flagged that there’s room to act with increased fiscal and monetary support. Lou previously said in March that the nation’s leaders “didn’t care that much” about the Moody’s cut, because the move had little market impact.
At the same time, the minister said on Friday that China’s economy was facing headwinds, mainly from an increasingly ageing population. The country was taking on strong measures and reforms to tackle the “downward pressure”, he said.
