Recent observations highlight China's economic vitality and strength. A senior fellow at the Council on Foreign Relations noted in a New York Times article that after examining China's artificial intelligence development, the United States cannot win this race. Separately, during the Beijing Auto Show, an executive from a major Chinese automaker told foreign media that the company can now survive and succeed even without the US market. These two distinct accounts, while seemingly unrelated, serve as microcosms of the current dynamism and resilience of the Chinese economy.
This robustness is widely recognized. On April 27, the international credit rating agency Moody's released a report affirming China's "A1" sovereign credit rating and upgrading its outlook from "negative" to "stable." The rationale for the adjustment was clear: China possesses the economic and fiscal capacity to manage challenges both domestically and internationally. In response, China's Ministry of Finance stated that this rating reflects Moody's high recognition of the strong resilience demonstrated by China's macroeconomy and fiscal strength amidst external shocks, as well as the new drivers and progress in China's high-quality economic development.
Globally, the economic landscape is clouded by persistent geopolitical conflicts, elevated inflation expectations, and accumulating debt risks, with some economies trapped in low growth, high debt, and high inflation. In this complex environment, every adjustment by international rating agencies captures the attention of global capital and markets. Sovereign credit ratings significantly influence financing costs, foreign investor confidence, cross-border cooperation, and are a key benchmark for assessing an economy's stability.
In recent times, some overseas institutions have viewed China through a biased lens, often exaggerating localized issues and making predictions based on a narrow, short-term perspective, thereby underestimating China's regulatory capabilities and development potential, leading to misjudgments. However, facts speak louder than words, and those predicting China's decline have been disappointed once again. Facing multiple internal and external pressures, the Chinese economy has not succumbed to predicted pitfalls like peaking growth but has instead steadily advanced step by step.
Behind Moody's decision to upgrade China's credit rating outlook, several positive trends in the Chinese economy are evident. Economic growth is accelerating. First-quarter GDP grew 5% year-on-year, a 0.5 percentage point increase from the fourth quarter of 2025, exceeding market expectations. Moody's acknowledged that sustained economic growth and effective debt management underpin the stabilized outlook, projecting China's real GDP growth to reach 4.5% in 2026, which provides policymakers ample space to address structural challenges.
The three key drivers of the economy also performed strongly. First-quarter consumption growth accelerated by 0.7 percentage points compared to the previous quarter, investment growth turned from decline to increase, and import-export growth rates for the quarter were the highest in nearly five years. Fiscal performance remained solid. National fiscal revenue growth in the first quarter hit a three-year high for the same period, while fiscal expenditure progress was the fastest in nearly five years. Ministry of Finance data shows that special bonds totaling 960.4 billion yuan were issued in the first quarter to replace existing implicit debt, completing 48% of the annual quota of 2 trillion yuan, with 590.4 billion yuan disbursed, providing substantial support for local governments to address存量隐性债务. Moody's expects that even with increased general government debt to support the economy, policymakers will manage local government debt resolution in a controlled manner, aided by low interest rates and substantial domestic savings that limit debt servicing costs.
Given this tangible performance, Moody's outlook upgrade is a logical and expected outcome. Ultimately, adjustments to credit outlooks serve as crucial market indicators, reflecting the effectiveness of economic governance. Globally, few economies can maintain stable credit ratings and continuously improve development prospects amidst complex conditions. In contrast, the stability, predictability, and openness demonstrated by the Chinese economy appear particularly valuable.
Comments