Moody's: China outlook stable

Moody's Investors Service said it affirmed China's Aa3 bond rating, P-1 short-term foreign-currency rating and Aa3 bond and deposit ceilings and changed the outlook to stable from positive.

The agency listed the following as the primary reasons for affirming the Aa3 rating and assigning a stable outlook:

• China's credit fundamentals remain consistent with an Aa3 rating, underpinned by continued robust economic growth, strong central government finances and an exceptionally strong external payments position;

• Progress has been less than anticipated in the process of both reducing latent risks by making local government contingent liabilities more transparent and in reining in rapid credit growth; therefore, some of the upward pressure on the Aa3 rating has eased; and

• Credit-positive structural reforms under the new leadership are expected over time, but their scope and pace may not be sufficient over the course of the next 12 to 18 months to justify a rating upgrade.

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