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China's Economic Growth to Remain Stable: Moody's

iconMay 29, 2013 10:09
Source:SMM
China's economy will see stable yearly growth of 7 to 8 percent through 2017 without any collapse, Moody's Investors Service said on Tuesday.

Updated: 2013-05-29 (Xinhua) BEIJING - China's economy will see stable yearly growth of 7 to 8 percent through 2017 without any collapse, Moody's Investors Service said on Tuesday.

The renowned US bond credit rating agency said at an annual credit risk conference that China's new leadership is advancing the country's reform and rebalancing at a measured pace, which can tamp down asset bubbles and prevent a boom-bust cycle.

China's consumer price index, a main gauge of inflation, will also remain low to moderate, and asset inflation in land and housing prices are contained, according to Moody's.

The agency kept China's rating at Aa3, but cut the country's credit outlook to stable from positive in April, citing concerns about its opaque local government debt, fast bank lending growth and stalled economic reforms.

Tom Byrne, senior vice president of Moody's sovereign group, said China's fundamentals are underpinned by its robust economic growth and strong central government finances.

He also mentioned the pace and scope of China's structural reform may not be sufficient over the next 12 to 18 months to justify a rating upgrade.

Mao Zhenhua, director of the Economic Research Institute at Renmin University, said local government debt is still under control but needs thorough reform in the local liability system to avoid local governments bearing excessive risks.

Moody's said the absorption of local-government associate contingent liabilities will lead to a very gradual decline in the debt burden.

Meanwhile, slower growth and increasing demand for social welfare expenditure will lead to moderately higher budget deficits, which will impede a more rapid decline in the debt burden.

In the latest official numbers available, China's National Audit Office (NAO) put the debt of local governments at 10.7 trillion yuan ($1.73 trillion) at the end of 2010.

Bank loans surged in the first quarter of 2013 and the China Banking Regulatory Commission in April issued guidance to strengthen the supervision of loans to local governments' financing vehicles.
 

Chinese economic growth
Moody's

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