NEW DELHI: Global rating agency Fitch has downgraded China's sovereign credit rating from stable to negative, citing concerns over the country’s rising fiscal deficit.
Fitch's projections anticipate a rise in the general government deficit to 7.1 per cent of Gross Domestic Product (GDP) in 2024, up from 5.8 per cent recorded in 2023.
"The outlook revision reflects increasing risks to China's public finance outlook as the country contends with more uncertain economic prospects amid a transition away from property-reliant growth to what the government views as a more sustainable growth model, " Fitch said.
The downgrade follows a similar move by Moody's in December. There has been a massive crash in China’s real estate sector, and the country is now trying to revive growth with a more balanced approach to promote other sectors of the economy.
While it lowered its ratings to a negative outlook from "stable", indicating a downgrade is possible over the medium term, the Fitch affirmed China's issuer default rating at 'A+'.