November 20, 2019 / 1:57 AM / 25 days ago

UPDATE 1-Fitch affirms China's A+ rating with a stable outlook

(Adds details from Fitch report)

Nov 20 (Reuters) - Credit ratings agency Fitch affirmed China’s long term foreign currency rating at A+, saying it was supported by the nation’s ‘robust’ external finances and its strong macroeconomic performance.

Fitch’s outlook on China is stable, it said. It added that the foreign currency ratings are primarily constrained by large structural vulnerabilities in the country’s financial sector.

The ratings agency also said it forecast China’s growth to slow to 5.7% in 2020 from 6.1% in 2019.

China’s macroeconomic policy has moved towards easing since mid-2018 to deal with the impact of the economy’s trade war with the United States, Fitch noted.

“Recent progress towards reaching a U.S.-China “phase one” trade deal suggests the possible postponement or eventual removal of some existing tariffs, which could pose an upside risk to our growth outlook,” the ratings agency said.

Fitch added that China has some room at its existing rating level to accommodate a temporary period of elevated fiscal deficits while external pressures subside.

In September, S&P Global also affirmed the ‘A+/A-1’ credit rating on China, stating that the country was going to maintain above-average gross domestic product growth and improved fiscal performance. (Reporting by Kanishka Singh and Mekhla Raina in Bengaluru; Editing by Shri Navaratnam and Muralikumar Anantharaman)

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