Rating agencies' China credit outlook downgrade fails to reflect reality of Chinese economy

Major credit rating agencies' decisions to downgrade the outlook for China's sovereign bonds failed to reflect the reality of China's economy, as the country registered a quite high growth rate of 6.7 percent in the first quarter of the year, China's Finance Minister Lou Jiwei said here Friday.

"While this growth rate is below our previous performance, it's still within our expectation, as the growth target for this year is set in the range of 6.5 to 7 percent," Lou told Xinhua at a press conference after the two-day G20 Finance Ministers and Central Bank Governors Meeting in Washington, D.C., the U.S. national capital.

In response to credit rating agencies' concerns about China's government debt, the Chinese official said China's central government debt is not at a high level and the country has taken measures to contain the recent increase in local government debt.

China has increased the level of central government debt at a prudential and proper rate, but it aims to advance reform and push for the deleveraging process of the society, he said.

"Credit rating agencies do not know the specific Chinese economic situation," Lou said through an interpreter. "I don't blame them because they don't know what's going on the ground in China."

The ratings on China's sovereign bonds by those agencies, however, are usually lower than the market assessments, indicating that there' s so-called bias in their ratings towards China, Lou noted.

"I really hope the credit rating agencies to have more effective communications with countries rated by them, and come to more comprehensive and objective assessments and judgments of the economic situation of the countries and measures taken by these countries," he said.

Last month, rating agencies Standard & Poor's and Moody both cut the outlook on China's sovereign bonds from stable to negative, but the decision had little impact on financial markets.