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Moody’s Downgrades China’s Sovereign Credit Rating Outlook
December 6, 2023
01

Moody’s Downgrades China’s Sovereign Credit Rating Outlook

On December 5, Rating agency Moody’s downgraded its China’s sovereign credit rating outlook from “stable” to “negative”, while retaining a long-term rating of A1 on the country’s sovereign bonds. Moody’s cited growing risks of persistently lower midterm economic growth and the property downturn, which “pose broad downside risks to China’s fiscal, economic and institutional strength”. This decision has drawn disappointment from China’s Ministry of Finance, which called the matter “disheartening”.  

In an interview, the Ministry emphasized despite fluctuations in economic recovery during different quarters, China has successfully overcome risks and pressures resulting from the pandemic and various domestic factors. In the first three quarters of the year, China’s GDP grew by 5.2% year-on-year, with domestic demand making a significant contribution to this growth, particularly through consumer spending which contributed 83.2% and capital formation which contributed 29.8%. Regarding Moody’s concerns about local government debt, the Ministry of Finance stressed that it has established an institutional framework to prevent and resolve risks related to local government debt. At the end of 2022, China’s local government debt stood at 35.1 trillion yuan, and total government debt, including debt managed by the central government, was 61 trillion yuan. The government’s statutory debt-to-GDP ratio of 50.4% is below the internationally accepted 60% warning line and lower than that of major market economies and emerging markets.

Moody’s downgrade of China’s sovereign credit rating outlook carries significant implications. However, China’s Ministry of Finance remains confident in the country’s economic prospects and its ability to deepen reforms and navigate risks and challenges.

02

China’s Express Delivery Volume Hits 120 Billion in 2023

On December 5th at 15:39, a package of flowers from Kunming, Yunnan was delivered to a customer in Chengdu by high-speed rail. It was the first time that the annual express delivery volume in China had hit the 120 billion record. Compared to last year, the volume of the express delivery industry surpassed the previous year’s annual volume one month ahead of schedule.

The volume of express delivery is an important indicator for Chinese economy. The growth is related to the increase of consumer demand. In addition, the rapid development of the express delivery industry will stimulate infrastructure construction in remote areas and the upgrading of digital technologies such as big data and AI.

03

China Aims to Achieve Commercial 6G by 2030

In an interview on December 6, Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology and head of the 6G task force, revealed that China is on track to achieve commercial use of 6G by 2030, with standardization to be completed by 2025.

During the interview, Wang Zhiqin outlined the envisioned future applications of 6G technology. He highlighted three new scenarios: the fusion of communication and perception, the integration of communication and AI, and the concept of ubiquitous connectivity, which refers to the integration of physical and virtual domains. These scenarios are expected to connect not only individuals, but also various intelligent entities such as robots and metaverse environments. Wang also mentioned that 5G could be further enhanced to address industry-specific challenges, which could pave the way for 6G advancements.

China began 6G technology trials in 2019 and has been conducting research on system architecture and technical solutions. These efforts are laying the groundwork for future advances in 6G technology. As China continues to make progress in 6G, it is positioning itself at the forefront of next-generation communications technology to revolutionize connectivity and unlock new opportunities for a digital future.

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