Moody's downgraded the ratings of 18 Chinese companies, netizens questioned the double standard, and the Western perspective was controversial
Prior to that, Moody intervened again after China was downgraded from AA3 to A1 in 2017.
While Moody's has not downgraded China again, it has downgraded its rating to "negative" from "stable".
The implication of this statement is that Moody's does not think that the future of China will hold anything.
Moody's explanation is simple and straightforward:
They expect China's GDP growth to continue to slow over the next three years, the housing market to shrink, and the country's debt to intensify.
The next night, Moody's again announced that the outlook for 18 ** companies and well-known private enterprises was downgraded from "stable" to "negative", including PetroChina, Sinopec, Alibaba, Tencent, and Tencent**.
What is the meaning and significance of Moody's "all-out" China?
In 1909, John Moody became an overnight fame when he pioneered a credit evaluation system for railroad bond debt and stood out in the U.S. scoring of industrial bonds and utilities.
It was at this time that his Moody's ** company, in the minds of American investors, was also a benchmark.
How to choose the right industry?According to Moody's creditworthiness, there is absolutely no mistake!”
Moody's was given another boost in 1975 when, along with Standard & Poor's and Fitch, it was given the highest credit rating by the U.S. Securities and Exchange Commission, with more than 800 analysts and a wider range of services.
Moody's not only rates companies, but also individual countries' treasuries and treasuries, and Moody's has developed a series of detailed rating systems for investors around the world to draw on.
In short, at this time, Moody's can influence the flow of money around the world.
I believe that all of you here have heard of Moody's evaluation of the national bonds of various countries and how effective they can be.
Moody's is one of the top three credit rating companies in the world, with operations all over the world.
And those companies that have been downgraded by Moody's and have a negative outlook (especially private companies) are bound to be heavily criticized by potential investors, making it difficult to raise money from outside, and even more difficult to borrow.
It can be said that Moody's downgrading the prospects of Chinese government bonds and related companies is likely to cause unnecessary disasters for them.
However, at the same time, we also need to think about another question: whether Moody's assessment can be truly objective and fair.
Comparing the credit ratings of some Western countries recently published by Moody's, we can see that the "double standard" is obvious.
In Germany, for example, Moody's gave the highest rating to Germany's state bonds in fiscal year 2023.
But Germany's national debt ratio reached 66 last year4%, compared to China's 504% is much higher.
In the last three years, the official German figure has been rising, from 59 in 20196% to 7%.
Such a huge discrepancy in numbers raises questions about Moody's double standards in rating national debt.
Since the beginning of the 21st century, Moody's has been declining in its institution's credit rating, and this series of events has also led to a sharp decline in its authority.
In the aftermath of the 2008 global economic crisis, Moody's rated Greece's national creditworthiness as A1, which is the same level as we are today.
However, in 2009, Greece was in debt trouble due to European debt problems and eventually had to declare bankruptcy.
This time, it not only made European countries "see death and not save it", but also made Moody's lose face.
In March, a Silicon Valley bank suddenly exploded, shaking the world and causing great fear throughout the industry.
However, before it collapsed, Moody's rated it remained A1, only after ***, it was quickly downgraded.
In other words, Moody's had not previously identified the potential risks of Silicon Valley Bank, which led Tesla's CEO Elon Musk to publish a mocking article.
The establishment of prestige is a long-term process, but the collapse of credibility is the easiest.
Moody's prestige has also gradually declined over time.
In this assessment of China's national sovereign debt outlook, Moody's raises three concerns about it:
1.China's three-year growth rate will continue to decline2, the debt problem of various places3, and the development prospects of the real estate industry are gradually becoming bleak.
The above three reasons are not made up by Moody's, but have been used by many financial blogs in recent years to "sing down" China's economy.
But as things stand, countries are ahead of us.
According to Moody's, the first and third reasons mentioned above are actually interrelated.
In fact, we have long found new development space outside of real estate.
In the past two years, the company has made great progress in new energy technologies such as new energy vehicles and mobile communication base stations, and the scale of production and sales has been greatly improved.
Especially in the field of new energy, the production and sales volume in the first half of the year more than doubled compared with the same period last year, and the sales of charging piles and photovoltaic cells and other related supporting products also increased significantly, with an increase of more than 50%.
According to **, our country will be the world's largest exporter of cars in the next year.
In addition, with the passing of the epidemic at the beginning of the year, domestic demand is gradually recovering, and various online and offline consumption have been greatly improved, and the driving effect on GDP has reached 44%。
With a population of 1.4 billion and huge domestic demand, it is enough to support the foundation of domestic consumption and consumption.
For the real estate industry, although it has experienced a period of rapid expansion, there is still a lot of demand.
On the basis of the original commercial residences, the transformation of urban villages and the implementation of affordable housing in various places have opened up new development space for the development of the real estate industry.
With regard to the regional debts mentioned in Article 2, the public and corporate debts of various localities are indeed objective.
However, since July, ** has put forward specific implementation opinions on the "debt reduction plan".
So far, 26 provinces and municipalities have issued special bonds, with a total amount of more than 12 trillion yuan, most of which is used to pay off existing debts.
Following Moody's downgrading China's sovereign credit and corporate credit ratings last week, China's finance ministry reacted quickly, saying that China's economy has entered a phase of transition and that short-term pain is inevitable but not lasting.
With the introduction of a series of financial policies, China's ** debt crisis has gradually been eliminated, and the demand in the domestic and international markets is also growing steadily.
In short, China has the strength to continue to deepen reforms and respond to various risks and challenges, so Moody's worries about China are unwarranted.
Therefore, we don't need to worry about Moody's downgrade, we just need to do it according to our own plan, and I believe that time will give us an answer.