China's economy

Is it China's turn for a downgrade?

After Fitch warns that it might cut China’s local-currency debt rating, Andy Rothman, China macro strategist at CLSA, says the country is in a good fiscal position to cope with recession in the global economy.
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Photo: AFP</div>
<div style="text-align:right; font-size:7pt; color:rgb(119, 119, 119);"> Photo: AFP</div> <div style="text-align:right; font-size:7pt; color:rgb(119, 119, 119);"> Photo: AFP</div>

Is China due for a credit downgrade That question arose this week after Fitch Ratings warned that it might cut China’s local-currency debt rating on worries of rising defaults after a lending spree.

But some strategists argue that China is in a relatively good position. According to Andy Rothman, China macro strategist at CLSA, the government has plenty of fiscal firepower to help it withstand a potential global recession, despite a huge amount of spending during the stimulus in 2009.

“The overall level of Chinese government debt hasn’t gone up that much. I believe there’s very little constraint on the Chinese government’s fiscal capacity. Even if...

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