Source: GT    Published: 2023-12-06

China has confidence and capability to achieve long-term stable development, and continuously bring new impetus and opportunities to the world, the country's top economic planner said on Wednesday after US ratings agency Moody's politically-biased move that cut its outlook on China's government credit ratings to negative from stable on Tuesday.

The strong resilience, huge potential, room for maneuver and sound fundamentals of the country's economy remain unchanged and will not change. China is the single largest engine of global growth and will contribute about one-third to the world's economic growth this year, an official with the National Development and Reform Commission (NDRC) said in a statement on the commission website.

Chinese analysts said Moody's overestimated the difficulties the economy faces while underestimated China's resolve and capability of boosting reforms and dealing with risks. They said the US credit rating agency's move is part of US-led Western campaign bad-mouthing and smearing China's economy, which will prove to be futile as the economy always thrives after pains.

Politically biased

"We shouldn't take Moody's credit rating seriously," Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies under the Renmin University of China, told the Global Times on Wednesday.

It's widely known that the US firm's credit rating on China and Chinese companies are politically biased. Moreover, Moody's rating system has limitations, as it lacks dynamic research and in-depth understanding of China's economic development and governance model, Dong said.

Analysts said the world's three largest credit rating agencies including Moody's, S&P Global Ratings and Fitch Group tend to be stricter on emerging-market countries, as they tend to get lower ratings even if their debt pressure is lower than that of developed economies.

Following the Tuesday ratings, Moody's on Wednesday placed 26 Chinese local government financial vehicles on review for downgrade, Reuters reported.

Chen Fengying, an economist and former director of the Institute of World Economic Studies at the China Institutes of Contemporary International Relations, said China's local government debt risk is lower compared with developed economies, and the central government has taken active steps to solve local government debt risks with the issuance of additional 1 trillion yuan ($141 billion) special purpose treasury bonds.

As of Wednesday, China's financial markets remain largely stable, reflecting that investors are not impacted by Moody's latest credit outlook cut and have maintained relatively strong confidence and sound expectations, Chen told the Global Times.

The Shanghai Composite Index slightly dipped by 0.11 percent to 2,968.93, while the Shenzhen Component Index rose by 0.66 percent to 9,533.25.

Meanwhile, overseas institutions have continued to make net purchases of Chinese bonds for a consecutive of nine months so far this year, domestic media outlet Shanghai Securities News reported on Wednesday. According to data from the People's Bank of China, the net buying of Chinese bonds by overseas institutions reached approximately 1 trillion yuan in the first ten months of 2023.

"The debt ratio of Chinese central government and local governments is within control, and the country's institutional advantages mean that stepped-up efforts could be made to solve debt, investment and other problems," Dong said, stressing that China will not experience economic recession caused by property market adjustments given huge domestic demand potential and strong internal development momentum.

Instead of expressing worries on China's finance, Moody's should do more research on China's development transformation, Dong said, pointing to new growth momentum of tech innovations, green development and new energy vehicles.

Global engine

Moody's move will not affect the long-term upward trend of the Chinese economy, and the country will firmly follow its own development model to achieve high-quality growth, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.

He said domestic consumption demand will continue to be released during the peak spending season in the fourth quarter, while the thawing of China-US relations will reduce pressure to external environment and further drive exports.

The fundamentals sustaining China's sound economic growth in the long run stay unchanged and will not change in the future... Just as some friends from the business community have said, China has become a synonym of the best investment destination. The "next China" is still China. We invite businesses from across the world to invest and cultivate success in China, Chinese Foreign Ministry spokesperson Wang Wenbin told a routine press briefing on Wednesday.

Looking ahead, China's economic development is still endowed with many favorable conditions and supporting factors, the NDRC official said, noting that several advantages including China's enormous market demand, a complete industrial system with globally complete industrial system, advanced infrastructure, and enhanced supply chain will continue to contribute to economic resilience and digital transformation.

"We should have confidence and patience for China's economy. The central government's key meetings such as the Central Financial Work Conference have indicated that top officials have known the difficulties faced by the economy and have announced a series of targeted policies," Chen said, noting that China will continue to post moderate growth over the coming five to ten years.

At this year's China International Import Expo, the number of attending Global Fortune 500 companies and leading industry leaders hit a record high of 289, with the value of signed transactions up 6.7 percent year-on-year, reaching $78.41 billion. In the first 10 months this year, a total of 41,947 foreign enterprises were newly established in China, up 32.1 percent year-on-year, reflecting foreign enterprises' confidence of investing in China while underscore China's bright economic prospects.

"We are positive about China's economic prospect," Han Jingjing, a sales and marketing vice president of the Swiss air quality technology company IQAir China, told the Global Times on Wednesday.

While the global market faces increasing uncertainties in geopolitical tensions and economic growth, China is a huge market with great stability and resilience, Han said.

"Transparency, stability and predictability are three priority factors that attract foreign enterprises. By doing a good job in these aspects, the Chinese market will create more opportunities for global companies," Han said, noting that the company expects vast growth potential in the Chinese market thanks to the country's strive for sustained development.