One of China’s leading ratings firms, Dagong Global Credit Rating Co, has cut the local and foreign currency sovereign ratings of the United States due to its increasing reliance on debt, Reuters reports.
Dagong now gives the US a sovereign rating of BBB+, down from A-, and also says that the company considers the country to have a negative outlook. The Beijing-based agency said that the US government’s solvency is likely to continue to be eroded by its growing reliance on a debt-driven model of economic development.
The move is likely a reaction to the tax plan signed into law by US President Donald Trump in December, which will add $1.4 trillion to the US’s national debt over the next decade. The country’s national debt already stands at $20 trillion.
“Deficiencies in the current US political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,” Dagong said.