S&P affirms China's sovereign credit rating at 'A+' with stable outlook, a validation of Chinese economic resilience

Photo taken on November 10, 2023, shows a decoration for the Annual Conference of Financial Street Forum 2023 in Beijing. (Photo: courtesy of Financial Street Forum)

The recent decision by rating agency S&P Global Ratings to maintain China's sovereign credit rating at "A+" with a stable outlook reflects a positive recognition of China's economic resilience and growth prospects, the Ministry of Finance said on Thursday.

The positive assessment by S&P along with the recent upward revision from other global institutions, underscores the resilience and growth potential of China's economy, experts said.

The decision of S&P to maintain China's credit rating was based on a thorough assessment of the country's macroeconomic growth and development outlook, according to a senior official from the Ministry of Finance.

The rating agency conducted in-depth discussions with Chinese government departments think tanks, market institutions, and local authorities, providing a solid foundation for an objective assessment, the official said.

S&P pointed out that despite some challenges, China's economy continues to grow steadily, supported by the effective implementation of macroeconomic policies. China's large market size, strong domestic demand, a solid development foundation, new growth drivers, and abundant resources are key strengths, the official said.

Additionally, the Chinese government's efforts to optimize macroeconomic policies and strengthen counter-cyclical adjustments will further enhance the country's internal development momentum, the official added.

The S&P rating is objective and fair as China's economy is currently on a stable growth trajectory, dismissing any unfounded concerns over debt risks, Pan Helin, a Beijing-based veteran economist, told the Global Times on Thursday.

"This impartial rating highlights S&P's confidence in China's economic stability and resilience, serving as strong proof and reflecting the rating agency's recognition of the country's economic accomplishments over recent years," Pan said.

Looking ahead, China's economic prospects primarily hinge on technological innovation. Key strategies include manufacturing transformation and advancement from low-end to high-end production to establish a competitive edge in Chinese industries, Pan said.

Pan emphasized that the future focus of China's economic growth on enhancing the service sector, particularly in high-value segments like technology services, financial services, and the platform economy, will further increase its contribution to China's economic framework.

The S&P's ratings were released following recent upward revisions of China's economic growth by the International Monetary Fund (IMF) and the World Bank.

The IMF on May 29 announced an upward revision of its forecast for China's GDP growth in 2024 and 2025, citing strong GDP data in the first quarter and policy measures, further adding to a growing number of optimistic signs that the Chinese economy remains on a solid track toward recovery.

In a report issued on June 14, the World Bank revised China's GDP forecast to 4.8 percent, up 0.3 percentage points from its previous forecast in December. The revision was made due to stronger-than-expected export expectations and recent measures to support property markets.

China's economy continued expanding in May, with the output of industrial enterprises above the designated size up by 5.6 percent year-on-year, while retail sales rose by 3.7 percent, according to data from the National Bureau of Statistics.

Data showed that the world's second-largest economy sustained the recovery momentum from the first quarter and is on a firm trajectory to hit the goal of 5 percent GDP growth in 2024, experts said.

It is expected that future policies will focus on stabilizing the real estate market and expanding domestic demand to consolidate and enhance the nation's economic recovery, Wu Chaoming, a deputy head of the Chasing Research Institute, told the Global Times on Thursday.

It is estimated that China's GDP will grow by around 5.3 percent in the second quarter and around 5.1 percent for the whole year, he added.