© Reuters. FILE PHOTO: A Chinese national flag flutters at the headquarters of a commercial bank on a financial street near the headquarters of the People’s Bank of China, China’s central bank, in central Beijing November 24, 2014. REUTERS/Kim Kyung-Hoon/File Photo
(Reuters) -Ratings agency Moody’s (NYSE:) slapped a downgrade warning on China’s credit rating on Tuesday, saying costs to bail out local governments and state firms and control its property crisis would weigh on the world’s No. 2 economy.
Moody’s lowered the ‘outlook’ on China’s A1 debt rating to “negative” from “stable” less than a month after it had done the same to the United States’ last remaining triple-A grade from a credit rating agency.
Historically, about one-third of issuers have been downgraded within 18 months of the assignment of a negative rating outlook.
Beijing likely needs to provide more support for debt-laden local governments and state firms which pose “broad downside risks to China’s fiscal, economic and institutional strength,” it added.
Moody’s also cited “increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the…
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