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Moody’s Downgrades China’s Credit Rating From Aa3 to A1 With Stable Outlook

© AP Photo / Andy WongA Chinese national flag flutters in the wind in between a high-rise residential and office complex in Beijing, China. (File)
A Chinese national flag flutters in the wind in between a high-rise residential and office complex in Beijing, China. (File) - Sputnik International
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On Wednesday, Moody’s Investors Service downgraded China's long-term local and foreign currency issuer ratings to A1 from the previous Aa3 level, citing the country's rising debt and slowing growth of its economy.

MOSCOW (Sputnik) — Moody’s Investors Service has downgraded China’s credit rating to A1 from the previous Aa3 level, changing the outlook from negative to stable, a press release of the Service said on Wednesday.

"The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows," the release said, adding that the stable outlook reflects the assessment of the risks as "balanced" at the A1 rating level.

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According to Moody’s, the country’s GDP will remain very large, with the growth remaining high in comparison to other states. However, the levels of potential growth were likely to fall in the next few years, with the GDP growth having already decelerated from 10.6 percent in 2010 to 6.7 percent in 2016, the released stated.

"Economy-wide debt of the government, households and non-financial corporates will continue to rise, from 256% of GDP at the end of last year," the release added.

According to the release, the outlook was changed from negative to stable due to the assessment that China’s government will manage to "maintain economic, financial and social stability in the near term" due to the fact that the government controls parts of the economy and financial system.

China's economy has recently been experienced significant turmoil, with growth rates at record lows, an increasingly volatile stock market and the yuan sliding against other currencies. According to the official data, the country’s GDP increase in 2016 made 6.7 percent, which is the lowest in 26 years.

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