Fitch Ratings on Thursday affirmed its sovereign credit ratings for China, citing the country's exceptional financial position, its recent economic performance and low government debt levels.
The firm called China's estimated 8.4 percent growth in 2009 impressive amid a global recession, but warned economic conditions in the country had increased imbalances in the economy and risks in the banking system.
"The agency believes the surges in both investment spending and credit growth are unsustainable. If unaddressed, this could lead to serious financial distress in the medium-term with sovereign rating implications," Fitch said.
The agency said Beijing's recent economic policy, including stimulus spending focused on infrastructure and returning to an exchange rate effectively pegged to the dollar, had set back the rebalancing of China's economy.
Fitch set China's long-term foreign currency and local currency issuer default ratings at A plus and AA negative, respectively, adding the outlook on the ratings was "stable".
It forecast China's economy would grow 9.3 percent in 2010, but cautioned similar growth rates could be difficult in the medium-term without exports rising sharply or increased domestic consumption.
Standard and Poor's affirmed China's A-1 plus short-term rating and an A plus long-term rating on Tuesday.
In November, Moody's upgraded its ratings outlook for China to "positive" from "stable," giving policymakers in Beijing the thumbs-up for how they have navigated the worst financial crisis in decades.
© AFP 2022