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China's Credit Outlook Stable: Moody's Upgrades Economic Forecast
27 Apr
Summary
- Moody's upgraded China's credit outlook to stable from negative.
- Sustained growth and effective debt management support the stable outlook.
- Real GDP growth is forecast at 4.5% in 2026 and 4.2% in 2027.
Moody's Ratings has elevated China's credit outlook to stable from negative, recognizing the nation's robust economic and fiscal resilience. This upgrade is underpinned by sustained growth patterns and effective debt management strategies.
Despite headwinds from a property sector downturn and cooling export growth, Moody's anticipates China's economy will continue its expansion. Forecasts project real GDP growth at 4.5% for 2026 and 4.2% for 2027, providing policymakers essential flexibility.
Authorities are expected to manage regional government debt resolutions systematically. While fiscal pressures and government debt are projected to increase, low interest rates and substantial domestic savings are seen as mitigating debt-servicing costs.
China's financial system, largely state-owned, offers significant demand for government debt, allowing gradual reforms and maintaining stability. Debt is expected to rise to 82.4% by 2027 from 68.5% in 2025.
