Fitch warns it may downgrade China

Fitch Ratings warned it might downgrade its outlook on China’s credit rating within two years due to the country’s high debt loads, Reuters reported. Fitch’s long-term local currency rating for China is AA minus, its fourth-highest level, but Fitch is the only ratings agency with a negative outlook compared with rivals Standard & Poor’s and Moody’s. Fitch estimated that bank lending would increase by US$2.8 trillion in this year alone. “This is the equivalent to 55% of China’s GDP, which is an extremely high number and a potential problem for banks’ asset quality,” said Jonathan Lee, Fitch’s senior director of financial institutions. Japan has also suffered credit rating downgrades from the three main rating agencies, which criticized Japan’s leadership for failure to present a credible plan to reduce the country’s debt load over time.