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11/02/2024 12:31:57 pm

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Moody's Downgrades China’s Economic Outlook to Negative

China Economy

(Photo : Getty Images) US ratings agency Moody's has downgraded economic outlook for China from ‘stable’" to ‘negative’ based on calculation that Beijing's fiscal strength would continue to decline in coming months.

US ratings agency Moody's has downgraded its economic outlook for China from 'stable'" to 'negative', highlighting that Beijing's struggle to turn the tides on its recent economic slowdown may be a long one.

Moody's said the change in its economic outlook for China is based on calculation that Beijing's fiscal strength would continue to decline in the coming months.

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Moody's also expressed concern over China's delay in implementing much needed reforms.             

"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 unfavourable," Moody's said in a note.

However, the rating agency stated that it is still not too late for the Chinese government to implement economic reforms.

Moody's decision to downgrade China's economy comes after authorities announced the country's Purchasing Managers' Index (PMI), which showed that factory activity in February contracted at the fastest rate since November 2011 - evoking fresh concerns.       

Less than 24 hours before China announced its PMI figures, China's Central Bank cut the Reserve Requirement Ratio (RRR) by 50 basis points to spur demand in its steadily slowing economy.

At the recently concluded G20 meeting of central bank governors and finance ministers in Shanghai, China assured global financial leaders that the country's economy is still under control and the government would take all possible measures to buck the downturn that it is currently facing.

China, the world's second largest economy, is currently facing its worst economic crisis in two decades. The country's economic growth rate has slided to lowest in 25 years, other important economic indicators have also been steadily contracting in recent months.    

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