S&P Global Ratings cut China’s sovereign credit rating for the first time since 1999, citing the risks from soaring debt, and revised its outlook to stable from negative.
The sovereign rating was cut by one step, to A+ from AA-, the company said in a statement yesterday. The analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China would be unlikely to avoid default should the nation default on its sovereign debt.
“China’s prolonged period of strong credit growth has increased its economic and financial risks,” S&P said. “Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.”
The downgrade, the second by a major ratings company this year, represents ebbing international confidence that China can strike a balance between maintaining economic growth and cleaning up its financial sector. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.
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Read more:
Moody's maintains G20 growth forecasts despite geopolitical risk
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"It’s bad optics for China, especially when they’re out there from a policy and rhetorical standpoint talking about debt more and acknowledging their debt challenge," said Andrew Polk, co-founder of research firm Trivium China in Beijing. "It may feel like potentially the international community is piling on and that will be frustrating."
The Finance Ministry in Beijing didn’t immediately respond to a fax after normal business hours seeking comment on the ratings change. In May, it refuted the downgrade by Moody’s Investors Service, saying the company had overestimated economic difficulties.
Scholars at the Chinese Academy of Social Sciences (CASS), a government think tank in Beijing, said recently that the level of government debt isn’t as risky as it might look, given the amount of assets that the state commands. CASS calculates that government assets stood at about 125.4 trillion yuan in 2015, or about 1.8 times gross domestic product.
The world’s second-biggest economy is forecast to slow after a robust first half, when it started the year with the first back-to-back quarterly acceleration in seven years, then surprised economists by matching that 6.9 per cent expansion again in the second quarter. Economists surveyed by Bloomberg this month project growth will remain above 6 per cent through 2019.
The International Monetary Fund last month increased its estimate for China’s average annual growth rate through 2020, while warning that it would come at the cost of rising debt that increases medium-term risks to growth. This month, IMF Managing Director Christine Lagarde said at an event in Beijing that leaders are making critical efforts to rein in risk.
"The impact for China is pretty limited," Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, said of S&P’s cut. "China is a country with a huge store of domestic savings and a still tightly controlled capital account. China doesn’t rely on foreign funding."
History suggests little relationship between sovereign rating cuts and debt performance. US.Treasury yields in 2011 moved little when S&P lowered the country’s credit score.
Foreign investors make up less than 2 percent of the onshore bond market -- something policy makers are trying to change. Debt issued offshore by Chinese borrowers has been in effect mainly domestic, with home buyers taking up about 65 percent of bond sales in the first half of the year, according to Australia & New Zealand Banking Group.
"The cuts of Moody’s and S&P don’t really reflect the international investors’ view on China’s economy," said Wang Tao, chief China economist at UBS Group in Hong Kong, adding that risks have been reduced, corporate profits are rising, shadow financing has been reined in and capital outflows contained, she said. "This is pretty behind the curve."
In the event that China were to default on its external debt, S&P said that three foreign banks operating there would be "unlikely to withstand a stressed scenario."
Moody’s cut its rating on China to A1 from Aa3 in May, citing similar concerns over economy-wide debt and effects on state finances. Moody’s cited the likelihood of a “material rise” in debt and the burden that will place on the state’s finances, while also changing the outlook to stable from negative.
“The market has already speculated S&P may cut soon after Moody’s downgraded,” said Tommy Xie, an economist at OCBC Bank in Singapore. “This isn’t so surprising.”
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
In numbers
1,000 tonnes of waste collected daily:
- 800 tonnes converted into alternative fuel
- 150 tonnes to landfill
- 50 tonnes sold as scrap metal
800 tonnes of RDF replaces 500 tonnes of coal
Two conveyor lines treat more than 350,000 tonnes of waste per year
25 staff on site
How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
- Drones must weigh 5 kg or less
WHAT FANS WILL LOVE ABOUT RUSSIA
FANS WILL LOVE
Uber is ridiculously cheap and, as Diego Saez discovered, mush safer. A 45-minute taxi from Pulova airport to Saint Petersburg’s Nevsky Prospect can cost as little as 500 roubles (Dh30).
FANS WILL LOATHE
Uber policy in Russia is that they can start the fare as soon as they arrive at the pick-up point — and oftentimes they start it even before arriving, or worse never arrive yet charge you anyway.
FANS WILL LOVE
It’s amazing how active Russians are on social media and your accounts will surge should you post while in the country. Throw in a few Cyrillic hashtags and watch your account numbers rocket.
FANS WILL LOATHE
With cold soups, bland dumplings and dried fish, Russian cuisine is not to everybody’s tastebuds. Fortunately, there are plenty Georgian restaurants to choose from, which are both excellent and economical.
FANS WILL LOVE
The World Cup will take place during St Petersburg's White Nights Festival, which means perpetual daylight in a city that genuinely never sleeps. (Think toddlers walking the streets with their grandmothers at 4am.)
FANS WILL LOATHE
The walk from Krestovsky Ostrov metro station to Saint Petersburg Arena on a rainy day makes you wonder why some of the $1.7 billion was not spent on a weather-protected walkway.
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20OneOrder%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20March%202022%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Tamer%20Amer%20and%20Karim%20Maurice%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Cairo%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%20%3C%2Fstrong%3E82%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Series%20A%3C%2Fp%3E%0A
Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
How to get there
Emirates (www.emirates.com) flies directly to Hanoi, Vietnam, with fares starting from around Dh2,725 return, while Etihad (www.etihad.com) fares cost about Dh2,213 return with a stop. Chuong is 25 kilometres south of Hanoi.
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Youth YouTuber Programme
The programme will be presented over two weeks and will cover the following topics:
- Learning, scripting, storytelling and basic shots
- Master on-camera presence and advanced script writing
- Beating the algorithm and reaching your core audience
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Squid Game season two
Director: Hwang Dong-hyuk
Stars: Lee Jung-jae, Wi Ha-joon and Lee Byung-hun
Rating: 4.5/5
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
MATCH INFO
Euro 2020 qualifier
Croatia v Hungary, Thursday, 10.45pm, UAE
TV: Match on BeIN Sports
MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
Company%20Profile
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MATCH INFO
Rugby World Cup (all times UAE)
Third-place play-off: New Zealand v Wales, Friday, 1pm
FA Cup semi-finals
Saturday: Manchester United v Tottenham Hotspur, 8.15pm (UAE)
Sunday: Chelsea v Southampton, 6pm (UAE)
Matches on Bein Sports
UAE currency: the story behind the money in your pockets
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%3Cp%3E%3Cstrong%3EAuthor%3A%3C%2Fstrong%3E%20Zeina%20Hashem%20Beck%3Cbr%3E%3Cstrong%3EPages%3A%3C%2Fstrong%3E%20112%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Penguin%20Books%3Cbr%3E%3Cstrong%3EAvailable%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
SPEC%20SHEET%3A%20NOTHING%20PHONE%20(2a)
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