Overview

• Fitch Ratings lowered China's long-term foreign currency issuer default rating from 'A+' to 'A', citing weakening public finances and rising debt levels.
• The downgrade follows Fitch's earlier decision in April 2024 to assign China a negative credit outlook due to fiscal risks during its economic transition.
• Fitch projects China's general government deficit will increase to 8.4% of GDP in 2025, up from 6.5% in 2024, driven by high deficits and subdued growth.
• New U.S. tariffs, including a 34% rate on Chinese imports, add uncertainty to China's economic recovery, although Fitch has not yet factored their impact into its forecasts.
• China's finance ministry criticized the downgrade as biased, asserting it does not accurately reflect the country's economic situation.