Downgrade Highlights China Debt Worries

Article Excerpt

BY AARON BACK
BEIJING—Fitch Ratings Inc. lowered one of its key ratings on China’s government debt, in one of the most prominent warnings to date over a credit buildup in the world’s second-largest economy.
The downgrade applies only to China’s yuan-denominated debt, which is primarily traded domestically—not the foreign-currency debt that it issues in international financial markets, so it is unlikely to have a big impact on global financial markets.
Nevertheless, it is the first outright downgrade in years of debt that is widely seen as buffered by China’s vast foreign-exchange reserves, highlighting a growing perception that massive lending by China’s banks, as …
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