Moody's downgrades China, warns of fading financial strength as debt mounts

Reuters ^

[BenLurkin]

Beijing's need to deliver on official growth targets is likely to make the economy increasingly reliant on stimulus, Moody's said.

"While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government," it said.

While the downgrade is likely to modestly increase the cost of borrowing for the Chinese government and its state-owned enterprises (SOEs), it remains comfortably within the investment grade rating range.

World stocks inched lower after the move, though Shanghai's main index .SSEC recouped early losses to end marginally higher. [MKTS/GLOB]

"After being very much at the front and center of global risk sentiment at the beginning of last year, the Chinese slowdown story has been almost forgotten, with politics throughout Europe and the U.S. taking the limelight," said David Cheetham, chief market analyst at brokerage XTB.

[backwoods-engineer]

And the march to WWIV continues. When empires run out of financial options, they start wars.

[FreeReign]

Moody's downgrades China, warns of fading financial strength as debt mounts

Currency manipulation doesn't work.

Communism doesn't work.