Standard and Poor’s Raises China’s International
Bond Ratings
The outlook on China's long-term foreign-currency bonds
was raised on April 16, 2003 to "positive" from
"stable" by Standard Poor's Corp., which cited
surging exports, record investment inflows and growing
private ownership of companies.
The change, the first in almost four years, means Standard
Poor's is more inclined to raise China's BBB rating, which
is a level above the lowest investment grade.
China "is rapidly laying the foundations of a more
market-oriented economy less reliant on government spending
to maintain GDP growth," according to Ping Chew,
director of sovereign ratings at Standard Poor's.
For China, higher credit rating would help sustain economic
growth, already the fastest of any major nation, by reducing
borrowing costs. China Mobile (H.K.) Ltd. China is expected
to report on April 17 that its economy grew more than
9 percent from a year earlier in the first quarter, the
fastest pace in four years, officials have signaled.
The decision by Standard Poor's to raise China's debt-rating
outlook suggests the company does not expect the outbreak
of the deadly SARS virus to slow Chinese foreign direct
investment or hurt its ability to pay foreign debt. China
has reported 65 deaths from severe acute respiratory syndrome,
a disease Chew said could add complications to spending
and investment into China.
China's booming exports and inflows of foreign investment
have swelled foreign-currency reserves by about two-fifths
from a year earlier to $316 billion at the end of March.
Its reserves, the world's largest after Japan's, are more
than nine times the country's short-term debt, according
to Standard Poor's.
But China's initial media ban on reporting about the
SARS virus and its moves to bar the World Health Organization
from visiting hospitals show that the country still has
much to do in terms of reforms.
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