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China'S Fiscal Capacity To Absorb And Absorb Local Debt

2011/8/23 10:18:00 36

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China's public finances are very healthy, even in places.

financing

The loss of platform loans still has the ability to digest and absorb, and will not affect China's current sovereign credit rating.

In August 22nd, David Beers, the managing director of the credit rating agency Standard Pool Co (Standard & Poor 's), the global sovereign government and the international public industry rating officer, made the above statement at a press conference.

The US sovereign credit rating has been cut down, and the European region is also in crisis. China also faces 10 trillion local financing platforms.

loan

Will it affect the sovereign credit rating of China in the future?

David Beers said that the loan of local financing platform also includes a large number of lending ways to deal with the crisis, which will bring a lot of contingent liabilities to the Chinese government.

Rationally, the current contingent liabilities may enter the government's balance sheet, but in the case of the current Chinese government's balance sheet, even if debt happens, it can absorb and digest. China's current credit rating is in line with the current situation.

From the statistical report of S & P, it has been noted that from 80s to the last century, the countries with AAA ratings have been declining in relative numbers or absolute numbers, and some developed countries with stable AAA ratings have been downgraded.

David Beers points out that this trend will continue.

This is mainly because the financial tasks of these developed countries are becoming more and more arduous. On the one hand, due to the impact of the financial crisis in 2008, there is a great loss of the government's balance sheet, and more importantly, some long-term problems can not be solved well, such as the aging of the population and the high society.

welfare

Expenditure, etc., brings pressure to public finance.

Spending on pensions, insurance and health care is on the rise.

At present, all countries are actively trying to solve the problem, but have not been able to find a good solution.

Such pressure will continue in the future, which will lead to changes in sovereign credit ratings of these countries.

David Beers said that China's good point is that the public finances are very healthy and do not have a high deficit.

From the overall perspective, China can control the challenges posed by declining population and aging.

Moreover, in terms of deficit, China's social welfare and social security expenditure will not exert too much pressure on the balance sheet.

However, as China's population is getting richer, the demand for welfare will rise accordingly.

China needs to balance and ensure social security that provides people's needs in a healthy financial situation, which will determine China's future credit reliability.

S & P currently ranks China's sovereign debt rating at AA-.

Li Daokui, a member of the central bank's monetary policy committee and a famous economist, once said that the S & P's ratings were very low.

At the press conference, David Beers also defended accusations against the US Treasury's standard & Poor's calculations.

He said the accusation was "not frank".

There is no mistake in the calculation of the sovereign debt of the United States by standard and poor's. The reason for the two sides' calculation is that the premise is different, not the calculation error.

The US Treasury is a hypothesis for the next ten years, and standard & Poor's is the assumption for the next 3 to 5 years.

In addition, Zhou Bin, director general of the S & P and chief executive of Greater China, also clarified the S & P's definition of AAA, not absolute security, not default, but the minimum risk of relative default.