Latest News:  


Ratings agency warns about rising debt

By Wei Tian  (China Daily)

08:16, February 26, 2013

A global credit war characterized by a surging money supply and currency depreciation, with undefined amounts and duration, will drag global credit into a currency crisis, Chinese ratings agency Dagong warned on Monday. Mang Zhongde / For China Daily

Dagong says current pace of growth approaching 'unsustainable' levels

Rising levels of sovereign debt in developed countries are posing a series of threats to emerging economies, China's leading credit rating agency has warned.

In a report published on Monday, Dagong Global Credit Rating said this year the government debt of some already "highly indebted" developed countries - which accounts for 80 percent of outstanding global government debt - will continue moving toward what it called an "unsustainable state".

It warned that it now expected an ongoing global credit war as a result, "characterized by surging money supply and currency depreciation", which would drag the global credit market into "a currency crisis".

The Beijing-based ratings agency - which announced in October that it was partnering with agencies in the US and Russia in a bid to break the dominance of major ratings names such as Moody's in assessing national and company debt - estimates that the debt of these countries will reach 331 percent of their fiscal revenue (against 328.4 percent in 2012), and 123.5 percent of their GDP (120.9 percent in 2012).

Its report said the accommodative monetary policy of the US Federal Reserve has relied on the dollar's role as an international reserve currency, transferring its debt risk to creditor countries.

In Japan, it added, sovereign credit risk is also on an upward trend, due to its inability to solve its underlying economic problems, with the government there resorting to an extreme loosening of its monetary policy to prop up a flat-lining economy.

Meanwhile, the report added that recessionary fears across the eurozone are unlikely to dissipate in 2013, meaning sovereign debt levels in various European countries will remain.

Dagong's comments came as Moody's Investors Service cut the sovereign credit rating for the United Kingdom on Friday from the highest Aaa to Aa1 - its latest in a series of downgrades of developed countries, since the US lost its triple-A rating in Aug 2011.

"The main driver of our decision to downgrade is that despite considerable structural economic strength, the UK's economic growth will remain sluggish over the next few years owing to the slow growth of the global economy," said Sarah Carlson, Moody's lead analyst on the UK.

【1】 【2】

We recommend:

Keeping the brand full of beans

Companies struggle to find, keep workers

Shares crumble as result of housing curbs

Liquor makers fined 449m yuan for price monopoly

Tougher fuel standards take form

Movie-themed fortunes 'never guaranteed'

Email|Print|Comments(Editor:MaXi、Liang Jun)

Leave your comment0 comments

  1. Name


Selections for you

  1. Carrier-based aircraft regiment in training

  2. Skill competition of core scouts

  3. Heavy snowfall shrouds beautiful Lake Bled

  4. Lantern Festival celebration

  5. Attractive girls at an art college's enrollment site

  6. Chinese receive Lantern Festival

  7. Buddhist monks dance at Labrang Monastery

  8. Her mighty needle sets her apart, with style

  9. IKEA stops selling meatballs for horsemeat

  10. Output growth hits 4-month low, says HSBC

Most Popular


  1. China 'firmly supports' BRICS
  2. Water quality a concern
  3. Kerry aims high in maiden foreign trip
  4. Open communication for Peninsula peace
  5. Spring Festival offers window into China
  6. Fatter red envelopes miss point of tradition
  7. Opportunities amid challenges
  8. Children deaths lead to calls for better guardianship
  9. New CPC leadership's first 100 ruling days inspiring
  10. Keeping the brand full of beans

What’s happening in China

Have you been absent during your children's childhood?

  1. Unsung Hero: Love for mother
  2. Fireworks sales fizzle during Lunar New Year
  3. China to expand organ donor system nationwide
  4. 5 injured in chemical plant explosion
  5. Police investigate toxic school uniforms