The Chinese minister of finance accused international credit-rating companies of “bias” against the country after Standard & Poor’s Rating Services and Moody’s Investors Service lowered their sovereign outlooks on the world’s second-largest economy.
“Historically, the market performance of most of China’s sovereign debt was higher than the assessment of the credit-rating agencies,” Chinese Minister of Finance Lou Jiwei (樓繼偉) said at a news briefing in Washington on Friday after a G20 meeting.
“That means there’s bias,” Lou said in response to a question from China’s Xinhua news agency.
Last month’s downgrades did not reflect China’s “economic reality,” and the first quarter’s 6.7 percent growth rate was still very high, Lou said.
While the pace was slower than last year, it was expected and in line with China’s target range of 6.5 percent to 7 percent, Lou said.
China is also taking measures to control the increase and size of local government debt, a concern cited by Moody’s and Standard & Poor’s, he said.
Lou’s comments were China’s strongest against the credit-rating agencies, after the ministry last month said they underestimated the country’s ability to handle any economic risks.
Standard & Poor’s reduced the outlook for China’s “AA-” long-term credit rating to “negative” from “stable” last month, following a similar move by Moody’s earlier in the month.
Chinese economic officials have repeatedly tried to calm investors’ concerns over the nation’s outlook and flagged that there is room to act with increased fiscal and monetary support.
Lou previously said that the nation’s leaders “did not care that much” about the Moody’s cut, because the move had little impact.
At the same time, Lou on Friday said that China’s economy is facing headwinds, mainly from an increasingly aging population.
The country is taking on strong measures and reforms to tackle the “downward pressure,” he said.
“I am afraid the credit rating agencies are not familiar with these reforms, so I do not blame them,” Lou said, citing a debt-to-equity swap program for which the government has not released a detailed plan yet.
China’s transformation to a consumer-led economy might be a “rocky” experience, IMF first deputy managing director David Lipton said on Bloomberg Television on Friday.
While the IMF upgraded its China growth forecasts by 0.2 percentage points for this year and next year, it was concerned about the quality of China’s growth.
“The IMF only sees the measures we recently adopted on the demand side, but we have different views on the supply-side reforms,” Lou said. “I don’t want to comment on their forecast. They have their own logic.”
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