Fitch Ratings revised China's long-term external debt outlook from stable to negative, citing rising risks to the country's fiscal outlook.
Growing economic uncertainty and China's efforts to shift its growth model away from one driven by the real estate market have eroded financial reserves, according to a statement issued Wednesday by the agency.
“Fiscal policy is increasingly likely to play an important role in supporting growth in the coming years, which may keep debt on a steady upward trend. Contingent liability risks may also be rising, as lower nominal growth exacerbates the challenges of managing high leverage across the economy.
The agency maintained the country's rating at A+, taking into account its "large and diversified" economy, "remaining strong" economic growth prospects compared to its peers, strong global commodity trade, strong external financing, and the Chinese currency's reserve currency status, Fitch said.
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