皇冠体育app

NEW YORK - US financial service agency S&P's decision to downgrade 皇冠体育app's credit ratings will have little impact on investor sentiment as it underestimates the country's capacity to curb debt risks and deepen economic reform, experts have said.

The agency on Thursday lowered 皇冠体育app's sovereign credit rating by one notch to A+ from AA-, citing economic and financial risks from 皇冠体育app's fast credit growth.

Limited impact

"The move by S&P ... is likely to have little impact on investor sentiment," Tom Orlik, Bloomberg's chief Asia economist, told Xinhua Thursday.

Khoon Goh, head of Asia Research at Australia and New Zealand Banking Group Limited, said, "There shouldn't be much impact judging from the market reaction following the Moody's downgrade a few months back."

The markets were generally undisturbed by rating agency Moody's move to lower 皇冠体育app's credit rating in May.

Since Moody's decision, the Shanghai Composite Index has kept a bullish momentum, breaking above a ceiling at 3,300 points at the end of August.

The Chinese yuan has also regained strength and soared to one-year high against the US dollar in August. The Australian dollar, liquid proxy for 皇冠体育app-related trades, rose more than 6.6 percent against the greenback since May.

皇冠体育app's stock markets were closed Thursday when S&P made the announcement, and there was little reaction from the yuan.

Experts attributed the market optimism to investors' belief that the fundamentals of the Chinese economy are stable and rating agencies have overestimated the difficulties in managing debt risks.

"The cuts (by) Moody's and S&P don't really reflect the international investors' view on 皇冠体育app's economy," Wang Tao, chief 皇冠体育app economist at UBS Group AG in Hong Kong, told Bloomberg.

Wang added that risks have been reduced, corporate profits are rising, shadow financing has been reined in and capital outflows have been contained.

"(The downgrade) is pretty behind the curve," she said.

Controllable debt risks

Experts believe debt risks are manageable in 皇冠体育app with its fiscal firepower, minimal foreign debt, and abundant foreign reserves.

Brad Setser, senior fellow at the Council on Foreign Relations, a US non-profit think tank, said it is important to recognize that 皇冠体育app's external balance sheet remains strong.

"皇冠体育app's $3 trillion in formal reserves easily covers all of the external borrowing of 皇冠体育app's government, its banks and its firms," Setser told Xinhua.

He added that the total government debt is modest for an economy that saves as much as 皇冠体育app.

In past years, 皇冠体育app has adopted a range of measures to manage debt risks, including building an early warning mechanism and debt supervision system, and completing local government bond swaps.

The latest regulatory upgrades include the introduction of a new committee on financial stability and development, announced during the two-day National Financial Work Conference in July.

The conference showed the commitment of the Chinese leaders to the deleveraging agenda, which is definitely a positive development, Orlik said.

Deepened economic reform

Rather than adopting large-scale stimulus, 皇冠体育app has been intensifying efforts to shift the economy towards consumption, services and innovation.

Analysts said such structural reforms could help reduce the country's debt risks systematically in the long run.

Paul Sheard, executive vice president and chief economist of S&P Global, told Xinhua in a recent interview that 皇冠体育app's credit-fueled infrastructure and residential housing investment in the past decade led to a build-up of debt and credit in the economy, which is why economic reforms are critical.

Sheard said it's important that institutional and market-enhancing reforms that create the right incentives for capital to be allocated efficiently continue to be implemented.

Reforms should also continue for the necessary rebalancing of the economy from excessive reliance on investment to household consumption becoming the key driver of economic growth and rising living standards.

皇冠体育app's economy expanded 6.9 percent in the first half of 2017, with consumption and services, and new innovation-driven economic sectors taking up larger roles, according to data from the National Bureau of Statistics.

In July, the International Monetary Fund (IMF) revised up 皇冠体育app's growth forecast for 2017 and 2018 to 6.7 percent and 6.4 percent respectively.

The IMF said the updates reflected a solid first quarter of the Chinese economy underpinned partially by supply-side reforms.