China’s economy shows positive long-term trend

Following credit rating agency Moody’s downgrade of China’s sovereign credit rating from Aa3 to A1, on September 21, Standard & Poor’s also cut the county’s sovereign credit rating from AA- to A+, but with a stable outlook. These actions raised some concerns but aroused limited market response. Facing the sovereign credit rating downgrade, China remains calm and its economy still shows a positive long-term development trend.

Obviously, the reasons for these industry downgrades are farfetched. The official explanation from Standard & Poor’s mainly stressed that “the prolonged period of strong credit growth has increased China’s economic and financial risks.” However, as we all know, China’s rapid credit growth in 2017 is the result of “financial deleveraging.” As a step to enhance the development of the country’s real economy, it precisely indicates that the risk of China’s financial system is shrinking.

We should look at China’s short term and long term economic development trends. China is changing the pace of its economic growth and is shifting the focus from “quantity” to “quality.” In the short run, ups and downs are inevitable, but they will not affect long-term economic development. Additionally, China’s monetary, fiscal and industrial policies leave sufficient room for manoeuvre, and the overall logic of reforms maintain strong momentum. Standard & Poor’s lowered China’s sovereign credit rating just because of a few short-term economic phenomena. The ratings firm has done so either out of a lack of vision or more subtle intentions.

Over the long time, Western credit rating agencies have monopolized the credit consulting market. By upgrading Western countries and downgrading emerging economies, these firms knowingly create a financial scissors effect that guides resources toward developed Western countries. In fact, since China’s reform and opening up, many Western politicians, scholars, media members and executives from multinational companies have made bearish statements about China, but none of these predictions have ever come true.

Of course, Western credit ratings have provided a certain perspective and measure of risk that allows a better understanding of the difficulties on the road ahead. We will make steady progress towards achieving our long-term goals with external supervision and reference.

(The author is an economist with the China Development Bank Bureau of Funds, and this article was originally published by People’s Daily overseas version.)

Chinas economy shows positive long-term trend

Following credit rating agency Moodys downgrade of Chinas sovereign credit rating from Aa3 to A1, on September 21, Standard Poors also cut the countys sovereign credit rating from AA- to A+, but with a stable outlook. These actions raised some concerns but aroused limited market response. Facing the sovereign credit rating downgrade, China remains calm and its economy still shows a positive long-term development trend. Obviously, the reasons for these industry downgrades are farfetched. The official explanation from Standard Poors mainly stressed that the prolonged period of strong credit growth has increased Chinas economic and financial risks. However, as we all know, Chinas rapid credit growth in 2017 is the result of financial deleveraging. As a step to enhance the development of the countrys real economy, it precisely indicates that the risk of Chinas financial system is shrinking. We should look at Chinas short term and long term economic development trends. China is changing the pace of its economic growth and is shifting the focus from quantity to quality. In the short run, ups and downs are inevitable, but they will not affect long-term economic development. Additionally, Chinas monetary, fiscal and industrial policies leave sufficient room for manoeuvre, and the overall logic of reforms maintain strong momentum. Standard Poors lowered Chinas sovereign credit rating just because of a few short-term economic phenomena. The ratings firm has done so either out of a lack of vision or more subtle intentions. Over the long time, Western credit rating agencies have monopolized the credit consulting market. By upgrading Western countries and downgrading emerging economies, these firms knowingly create a financial scissors effect that guides resources toward developed Western countries. In fact, since Chinas reform and opening up, many Western politicians, scholars, media members and executives from multinational companies have made bearish statements about China, but none of these predictions have ever come true. Of course, Western credit ratings have provided a certain perspective and measure of risk that allows a better understanding of the difficulties on the road ahead. We will make steady progress towards achieving our long-term goals with external supervision and reference. (The author is an economist with the China Development Bank Bureau of Funds, and this article was originally published by Peoples Daily overseas version.)