China's finance ministry on Wednesday defended the country's fiscal strategy, affirming its 3 percent deficit ratio for 2024 as \"moderate\" and \"rational\" following Fitch Ratings' downgrade of China's credit outlook.
A ministry spokesperson stated that Fitch failed to recognize the anticipatory and long-term benefits of China's fiscal policy adjustments aimed at high-quality development.
The official emphasized the importance of maintaining a moderate deficit and strategic debt utilization to fuel domestic demand and economic growth, ultimately preserving China's sovereign credit reputation.
The decision to set the 2024 deficit ratio at 3 percent aligns with a pragmatic approach to foster stable economic growth and manage government debt effectively, providing sufficient policy space to address upcoming challenges and risks.
Regarding local government debt risks, the ministry assured that repayment of principal and interest on local governments' legal debts is effectively guaranteed and hidden debts are being resolved.
Reflecting on the 5.2 percent GDP growth in 2023 and the government target of around 5 percent for this year, the ministry reiterated China's commitment to high-quality growth, reinforcing the positive momentum of the economy and maintaining a solid sovereign credit standing.
Fitch maintained China's sovereign credit rating but shifted its outlook from \"stable\" to \"negative\" on Wednesday, citing financial health concerns.
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Finance Ministry defends China's 3% deficit ratio as prudent
cgtn.com
