Moody's Changes China's Outlook from Negative to Stable

SadaNews - On Monday, Moody's credit rating agency changed its outlook for China from "negative" to "stable".

Moody's attributed the adjustment to its view that the country's economic and financial strength will remain resilient despite ongoing domestic pressures and trade and geopolitical challenges.

The agency also confirmed China's long-term rating at A1 in both local and foreign currencies.

It stated that export growth is likely to slow, but China's competitiveness will mitigate the severity of this slowdown, allowing GDP growth to decline only gradually.

Moody's added that policies focused on high-productivity sectors, along with a thoughtful approach to addressing regional and local government debt issues, could help improve capital efficiency, even with the overall rise in government debt. Notably, industrial profits in China increased by 15.5 percent during the first three months of this year, compared to a 15.2 percent increase during the first two months of the year.

In just the last month, industrial profits in China rose by 15.8 percent year-on-year.

Industrial companies in China experienced growth in profits during the first quarter despite rising oil and raw material prices during the first three months of this year, attributed to the U.S.-Israeli war against Iran that began on February 28.

Additionally, China's economy accelerated in growth during the first quarter of this year, recording an increase of 5 percent compared to last year, significantly overcoming the repercussions of the war in Iran thus far, according to government data released in mid-April.

This month, the International Monetary Fund lowered its growth forecast for the Chinese economy to 4.4 percent for 2026. Meanwhile, Chinese leadership set a growth target between 4.5 percent and 5 percent for this year, the slowest since 1991.