China says Fitch Ratings outlook downgrade "regrettable"

China's Ministry of Finance said Wednesday that it is regrettable to see the decision by Fitch Ratings to downgrade the country's sovereign credit rating outlook, Azernews reports, citing Xinhua.

The ministry made the remarks in response to media queries after the agency decided to maintain China's sovereign credit rating, while on the same day revising its outlook on China's sovereign credit rating from stable to negative.

Fitch's rating system has failed to effectively reflect the positive effects of China's fiscal policies on boosting economic growth and stabilizing the macro leverage ratio in a forward-looking manner, the ministry said in a statement.

The ministry said the plan to keep China's deficit-to-GDP ratio at 3 percent in 2024 is generally "moderate and reasonable," which will help stabilize economic growth, control the government debt level, and reserve policy space for potential future risks and challenges.

"In the long run, maintaining a moderate deficit and making good use of the valuable debt funds is conducive to expanding domestic demand, supporting economic growth, and ultimately helping maintain sound sovereign credit," it said.

The long-term positive momentum of the Chinese economy has not changed, and the Chinese government's ability and determination to maintain sound sovereign credit also remained unchanged, the ministry noted.

Regarding China's local government debt, the ministry said the risks have been mitigated as the country has taken active and prudent steps to resolve them. Payments of principal local government statutory debt and interest on this debt are guaranteed, while the size of hidden debt is gradually declining.

"The work on resolving China's local government debt is progressing in an orderly fashion, and the risks are generally under control," it said.