Chinese state media called Moody’s “biased” on Wednesday for its negative rating outlook on the world’s second largest economy, but some analysts said the government’s official reaction was more restrained, signalling Beijing’s own worries about surging debt.
Chinese officials often respond with aggressive statements to international scrutiny. After Moody’s and S&P Global’s previous outlook cuts in 2016, then finance minister Lou Jiwei slammed the ratings agencies as “biased” during a G20 meeting.
But in the official statement responding to Moody’s rating on Tuesday, the ministry only expressed “disappointment”. On Wednesday, a foreign ministry spokesperson said China is capable of deepening reform and addressing its challenges, and that it welcomed “all friends” from “all over the world” to invest in its economy.
Alfred Wu, associate professor at the Lee Kwan Yew School of Public Policy at the National University of Singapore, said that while Chinese propaganda still aimed to show strength to a domestic audience, the more nuanced tone from the government was targeted at the international community.
Wu said this was a sign that China takes on board global concerns about its weakening growth prospects and “wants to be seen as credible and responsible” in dealing with the issue.
“The discourse of China’s rise was so strong in 2017. The sentiment has changed dramatically,” Wu said.
“The finance ministry recognises this, and that it needs to come up with a more professional response than it did before.”
While keeping China’s sovereign rating at A1, Moody’s cut its outlook to negative from stable, citing surging local debt and property market woes, conditions which many economists have warned are pushing the economy to Japan-like decades of stagnation.
The Communist Party’s tabloid Global Times published an article citing economists saying Moody’s decision was “biased, as it grossly exaggerated or manufactured risks and challenges”.
Moody’s did not respond to questions on Chinese media criticism and the official reaction.
