MANILA, Jan. 20 -- China's economic reform is one of the key issues that will impact sovereign ratings and growth prospects of developing Asian economies this year, according to a global credit rating agency.

In its latest reports "2014 Outlook: Emerging Asia Sovereigns" and "Asia-Pacific Sovereign Overview," Fitch Ratings forecasts the emerging Asian region to expand 6.5 percent in 2014 -- the strongest growth of any global region. If regional giants China and India are excluded, the agency projects growth in Emerging Asia to be 5.1 percent.

Fitch said seven of nine emerging Asian sovereigns are on a Stable Outlook.

Andrew Colquhoun, Head of Asia-Pacific Sovereign Ratings, said China's rebalancing and reform are among the "three broad themes in play for 2014" for emerging Asian economies.

Colquhoun said in a recent analysts briefing that these economic reforms will alter the path of China's trade and consequently its role in the global economy.

"The key factor here is the (Chinese) authorities' commitment to rebalancing and reform," he said.

China has emerged as the world's second largest economy thanks to credit and exports which powered its rapid growth for the past few decades. The National Bureau of Statistics said China has contributed an average of 20 percent to the world's economic growth annually since the 2008 financial crisis.

Last November, the third plenary session of the 18th Central Committee of the Communist Party of China (CPC) announced China would deepen its economic reform to ensure the market would play a "decisive" role in allocating resources. The country's senior leaders also pledged that China will focus more on innovation and the quality and efficiency of the economy.

Apart from China's economic reforms, Fitch said the tapering of the U.S. Federal Reserve's bond-buying program and policy management in India and Indonesia will impact emerging Asian economies this year.

Economies that need more external funding and have less resilient policy frameworks will be hurt by the U.S. Fed's decision to wind down its extraordinary policy support as this will encourage investors to leave emerging markets and shift their funds back to developed economies. India and Indonesia, which are both dealing with weaker currencies, rising inflation and current- account deficits, need better fiscal and policy management to protect their sovereign credit profiles from external stresses.

Fitch is also monitoring how domestic political tensions will affect developing Asia.

"Domestic political uncertainty could affect credit profiles by impeding reform. Structural reforms that underpin the prospects for sustained growth without major imbalances would strengthen credit profiles, and could lay the foundation for future positive rating actions across the region," Fitch said.

Of the nine emerging Asian Sovereigns included in Fitch's report, only Malaysia (A-) and Mongolia (B+) are on Negative Outlook. Malaysia is facing a current account and fiscal deficit while Mongolia's loose policy settings is threatening its economic stability.

Art Woo, director of Fitch Ratings, said Fitch has acknowledged the Malaysian government's plan to curb public spending. But he noted that that Fitch would like to see how these measures will be implemented and sustained.