Fitch rating agency said that given the risks to China's public finances, the outlook for the sovereign credit rating has been revised to negative. Although the agency has lowered its forecast, indicating the possibility of a downgrade in the medium term, it confirmed China's IDR rating at 'A+'.
Fitch economists expect the general government deficit to reach 7.1% of GDP this year (the highest level since 2020), compared with 5.8% of GDP in 2023. Regarding the prospects for economic growth, economists predict that GDP will grow by 4.5% this year after increasing by 5.2% in 2023. The government has set a target for GDP growth for the current year at 5%. International organizations forecast that China's 2024 GDP growth rate will likely fall between 4.5% and 4.9%, while the Chinese Academy of Social Sciences estimated the figure to be slightly higher, ranging from 4.8% to 5%.
"The revised forecast reflects the growing risks to China's public finance prospects as the country faces a more uncertain economic outlook amid a shift from property-based growth to what the government sees as a more sustainable growth model," Fitch said.