Fitch goes negative on China
Fitch cut its outlook on China's sovereign credit rating to negative, four months after Moody's made a similar move, as the country's economy has become more and more dependent on government debt in the absence of private sector growth.
For context, Fitch sees China's explicit central and local government debt rising to 61.3% of GDP in 2024, up from 38.5% in 2019. The country's total debt to GDP sits at a staggering 287%.
For years, the Chinese government has used debt financing to fund aggressive infrastructure and real estate projects around the country. However, the country has struggled to bounce back from the pandemic, with GDP growth still below 2019 levels, and earlier this year, Beijing ordered indebted local governments to halt some state-funded infrastructure projects.
For years, the Chinese government has used debt financing to fund aggressive infrastructure and real estate projects around the country. However, the country has struggled to bounce back from the pandemic, with GDP growth still below 2019 levels, and earlier this year, Beijing ordered indebted local governments to halt some state-funded infrastructure projects.
