On April 3, 2025, the international rating agency Fitch Ratings announced a downgrade adjustment of China’s sovereign rating from “A+” to “A” with a stable outlook. Professor Lijian SUN, Director of the Financial Research Center of Fudan Development Institute was invited by STV channel’s “Nightly News” program to share his views on this issue.

This article points out that credit rating was originally a routine operation of international agencies, which use a model mainly based on the expected analysis of the fiscal deficit, debt ratio, and other variables. Thus, it shall not be considered coherent with the negation of the current economic strength. This downgrade adjustment of Fitch Ratings shows a cognitive bias that it doesn’t fully understand China’s RMB-dominated debt, central bank policy space, and fiscal and monetary synergies and ignores the resilience of China’s economic structure and policy initiative.

The capital market of China reacted rationally to this downgrade adjustment. The Ministry of Finance successfully completed overseas debt issuance, and international investors remain optimistic about China’s outlook, indicating a mismatch between the rating agencies and the judgment of the market itself. Currently, the global credit system is facing a reconstruction, and China is promoting a more fair and objective international credit rating system. Under challenges, China will continue to play the “combined punch” of finance, currency, and industry, to strengthen the construction of three mainstays of technology, industry, and finance, to enhance the endogenous growth momentum, to promote the unification of the big market, to improve the ability to resolve debts, and to steadily push forward the high-quality development of the economy.

Translated by Ruihan CHEN

Full text in Chinese available at:

https://mp.weixin.qq.com/s/gEy-3Bb4gUlc_olRX-79ig