S&P affirmed China's sovereign credit rating at "A+" on Friday, citing its expectation that the country's economy will likely continue to grow by 4% or more over the next one to two years. S&P said the outlook on the rating remained "stable", reflecting the agency's view that China will provide larger fiscal support to keep the economy growing. China's finance ministry said on Friday that it welcomed S&P's decision to affirm China's ratings and outlook and vowed to continue to implement more proactive and effective macroeconomic policies. China's "strong progress" in strengthening supply chains, technological capabilities and manufacturing prowess has allowed its economy to remain resilient in the face of global uncertainties, including trade tensions with the US and the Iran war, S&P said. However, the ratings agency flagged weakness in domestic demand, citing a prolonged property-sector downturn and subdued consumer spending. Separately, ratings agency Fitch warned earlier this week that China risks slipping back into deflation without a more pronounced recovery in domestic demand, despite signs of improving price pressures earlier this year.
