By Fabiana Negrin Ochoa


Fitch Ratings analysts have revised their outlook for China's long-term foreign debt to negative, citing rising risks to public finances.

China's economic prospects are more uncertain as it pivots away from property-reliant growth, Fitch said in a note on Wednesday. It reckons that fiscal policy will play an increasingly big role in supporting growth, which could keep debt on a steady upward trend.

"Contingent liability risks may also be rising, as lower nominal growth exacerbates challenges to managing high economy-wide leverage," the ratings firm said.

It affirmed China's A+ rating, which is backed by a large, diversified economy and still-solid gross domestic product growth prospects relative to its peers. Fitch also cited the country's integral role in the global goods trade, robust external finances and the yuan's reserve currency status.

China's fiscal deficit could widen to a multi-year high in 2024 as the government steps up fiscal stimulus to offset economic headwinds, Fitch said.

It forecasts that the general government deficit will rise to 7.1% of GDP in 2024 from 5.8% in 2023, on a Fitch-consolidated basis, which includes infrastructure and other official fiscal activity outside the headline budget.

China's 2024 deficit will be the highest since the 8.6% GDP deficit seen in 2020, Fitch said.


Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com


(END) Dow Jones Newswires

04-10-24 0235ET