Fitch has downgraded its outlook on China's credit rating from stable to negative, citing increasing risks to its finances as the country faces economic challenges. The 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 a more sustainable growth model. Fitch believes the general government deficit will rise to 7.1% of GDP in 2024 from 5.8% last year, the highest since 2020.
China's Finance Ministry expressed "regret" over the revision, stating that the agency's methodology fails to effectively and prospectively reflect the positive role of fiscal policy in promoting economic growth. The fiscal budget deficit ratio for 2024 is set at 3%, which is described as "overall moderate" and "conducive to stable economic growth." The ministry has targeted 5% for economic growth for this year, which it says is "in line with realistic conditions." The long-term positive trend of China's economy has not changed, and the Chinese government's ability and determination to maintain good sovereign credit have not changed.