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Moody’s cuts China’s rating outlook to ‘negative’

March 2, 2016

BEIJING (Yonhap) — Moody’s Investors Service on Wednesday downgraded the credit-rating outlook of China to “negative” from “stable,” citing rising government debts, declining foreign-currency reserves and uncertainty about Beijing’s reform drive.

Weakening trade and manufacturing have fueled concerns about the Chinese economy, which has been struggling with stock market routs and mounting local government debt.

“China’s foreign exchange reserves have fallen markedly over the last 18 months, to US$3.2 trillion in January 2016, $762 billion below their peak in June 2014,” Moody’s said in a statement.

“Without credible and efficient reforms, China’s GDP growth would slow more markedly as a high debt burden dampens business investment and demographics turn increasingly unfavorable,” it said.

China’s economy grew 6.9 percent last year, marking the weakest annual growth in 25 years.