Dagong maintains China's sovereign credit rating

Dagong Global Credit Rating Co., Ltd., China's domestic rating agency, decided on Monday to maintain the local and foreign currency sovereign credit rating of China at AA+ and AAA with a stable outlook. The agency said the fundamentals of the Chinese economy have not changed despite domestic inflation and the debt crises in Europe and the United States. The deficits of the government at all levels are narrowing, the agency said, adding the central government has strong debt-payment capabilities in the local currency. The country's foreign debt payment capabilities are also strong given China's huge foreign exchange reserves and net assets abroad. Also, both the central government and the private sector have very low levels of foreign debt, the agency said. It said a series of economic reforms and development strategies by the central government meant strong economic growth would be sustained. The rating agency estimated the real growth rate of China's economy in 2011 and 2012 will be 9.2 percent and 8.7 percent, respectively, down from 10.4 percent last year. And inflation will be lower next year with an average 3.6 percent expected, while the agency's inflation forecast was 5.4 percent for this year. The deficit rate of the local government at all levels is predicted to be 1.4 percent and 1.1 percent in 2011 and 2012 respectively, and the debt burden of the central government to GDP will decrease from 16.6 percent in 2011 to 12.8 percent in 2015, it predicted. It also said the central government's foreign debt will stay for the long term at no more than 1 percent of the nation's GDP.