Fitch affirms China at 'A+'; Outlook Stable

In its latest review report released on Tuesday, Fitch Ratings affirmed China's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A+' with a Stable Outlook.

Key takeaways

“China's ratings are supported by the country's robust external finances, a track record of strong macroeconomic performance, and size as the world's second-largest economy.

China's economy is now staging a remarkable recovery. Real GDP rose by 3.2% yoy during 2Q20, above Fitch's prior expectations, and up from a 6.8% contraction in 1Q20.

Fitch forecasts real GDP growth of 2.7% in 2020 (previously 1.2%), among the highest across Fitch-rated sovereigns this year, though well below China's five-year historical trend of 6.7%. The risk of further coronavirus outbreaks cannot be ruled out.

Geopolitical tensions between China and a number of major economies, including the US, have escalated sharply across a spectrum of issues, including the pandemic, policies towards Hong Kong, territorial claims and a protracted trade dispute. 

In the short term, heightened tensions have not had an impact on China's credit fundamentals, and the degree to which they translate into policies that are supportive, neutral, or detrimental to the sovereign rating will only become evident over time.”