Ratings agency S&P Global on Thursday reaffirmed China’s long-term credit rating at A+ and indicated that its robust fiscal stimulus will help maintain resilient economic growth despite challenges from the property sector and tariff pressures. S&P stated that the outlook for China’s rating is “stable.”
“The stable outlook on the long-term sovereign credit rating reflects our view that China will return to self-sustaining economic growth of 4 percent or more annually over the next one to two years,” S&P remarked in a statement.
“This will allow the government to gradually reduce policy support for the economy over the next several years.” S&P noted that it could lower China’s rating if it anticipates the government will pursue larger fiscal stimulus over the next three to five years, but may elevate the rating if fiscal consolidation occurs more rapidly than expected.
S&P also confirmed China’s “A-1” short-term foreign and local currency sovereign credit rating. China’s finance ministry expressed its appreciation for S&P’s reaffirmation of China’s sovereign credit ratings and committed to “dynamically” adjust policy reserves while striving to meet the annual growth target.
In April, Fitch downgraded China’s sovereign credit rating, citing rapidly increasing government debt and risks to public finances, as policymakers prepare to protect the economy from rising U.S. tariffs. The world’s No. 2 economy grew at a slightly faster pace than anticipated in the second quarter. However, preliminary economic data for July have shown mixed results, with manufacturing activity contracting for a fourth consecutive month, even as exports experienced an unexpected boost.
Read more: China-Arab trade volume hits $407.4 billion in 2024, up 2.3 percent YoY
Fiscal approach for economic resilience
Additional information reveals that despite the challenges faced by China’s economy, including persistent headwinds from the property market and elevated tariff pressures, S&P Global’s confidence in China’s economic fundamentals remains underscored by its recent affirmation of the A+ rating. S&P’s outlook anticipates China maintaining a fiscal approach that supports gradual economic resilience, emphasizing the government’s capacity to manage policy support prudently over the coming years. The affirmation reflects confidence in China’s pursuit of self-sustaining growth at or above 4 percent annually, a forecast that aligns with multiple other financial institutions’ projections, including adjustments made by leading global banks and the International Monetary Fund amid fluctuating trade dynamics and policy measures.
Goldman Sachs Research projects China’s GDP growth in 2025 at approximately 4.5 percent, slightly moderating from 4.9 percent in 2024, with ongoing risks tied to increased U.S. tariffs partially offset by targeted fiscal stimulus measures from Beijing. Their analysis highlights that the structural challenges facing China’s property sector will likely continue to weigh on growth, with the property drag potentially subtracting close to 2 percentage points from GDP growth in 2025. Meanwhile, export growth is expected to decelerate markedly due to heightened tariff barriers, even as China’s strong price competitiveness and diversification to non-U.S. markets provide some cushion.
