2023-12-05 08:59:00
By Le Figaro with AFP
Published 5 minutes ago, Updated now
Chinese President Xi Jinping. CARLOS BARRIA / REUTERS
Real estate has long represented a quarter of China’s gross domestic product (GDP) and supports thousands of businesses and low-skilled employees.
The rating agency Moody’s lowered Tuesday by “stable” has “negative» the prospect of China’s rating, due to indebtedness in the world’s second largest economy.
«The shift to a negative outlook reflects growing evidence that the government and public sector will provide financial support to ailing regional governments and state-owned enterprises (…) which poses broad risks (…) for budgetary solidity“, indicates Moody’s.
The rating agency Moody’s lowered Tuesday by “stable” has “negative» the prospect of China’s rating, due to indebtedness in the world’s second largest economy. “The decision to change the outlook to negative reflects growing evidence that the government and public sector… will provide financial support to regional governments and state-owned enterprises in financial difficulty», justifies Moody’s.
That “poses vast risks (…) to fiscal strength” from China, notes Moody’s in a press release, due to economic growth “weaker» of the Asian giant and the difficulties of the real estate sector. Following this report, the Chinese Ministry of Finance said:disappointed» by Moody’s decision.
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The sector has experienced dazzling growth for two decades but the financial setbacks of emblematic real estate groups (Evergrande, Country Garden, etc.) are now fueling buyer mistrust, once morest a backdrop of unfinished housing and falling prices per square meter. To revive real estate and stimulate activity, the government has increased support measures for the sector in recent months. But the results remain inconclusive. The real estate crisis is a major obstacle to economic recovery.
It weighs on the country’s ability to achieve its growth objective for 2023, set by the government at “environ 5%».
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