The recent large-scale downgrade of the credit rating of China and its state-owned entities by Moody's has sparked widespread concern and interpretation. One view is that Moody's move is aimed at paving the way for US dollar capital to enter the Chinese market, thereby taking advantage of the US dollar interest rate cut to ** Chinese assets. However, according to one Wall Street expert, Moody's actions may not have been motivated by such strategic considerations.
The expert noted that viewing Moody's actions as a front stop for harvesting China for dollar capital may be an overestimation of Moody's goals and capabilities. Moody's, as a money-making organization, may have more of a purpose for its own financial gain. If Moody's were to get involved in such a large-scale operation, it would probably offend a large number of potential Chinese customers, and at the same time it would be difficult to find capitalists in the United States who were willing to pay for it.
Experts further analyzed that Moody's actions may be aimed at China's upcoming debt treatment measures. China is currently facing a huge scale of debt, including *** and local ** debt, totaling about 60 trillion yuan. When dealing with debt of this size, methods such as packaging debt listing or issuing new debt to pay off old debt may be adopted. Moody's may see an opportunity in these approaches.
Whether it's packaging debt to go public or issuing new debt, it's important that the debt is sellable on the international market. As China is likely to issue bonds to foreign investors, international credit ratings are particularly important. By downgrading the ratings of ** and state-owned units, Moody's may hinder China's large-scale debt issuance in the international market, while also providing some kind of service to the United States**. On the other hand, many entities in China may need to improve their ratings, which becomes another source of income for Moody's**.
Thus, from the Wall Street expert's point of view, Moody's behavior is more like a "rogue business" in which money is collected from both ends of the process, rather than out of long-term consideration of China's economy or policy. This interpretation provides an alternative perspective on the motivations behind Moody's actions, suggesting that they may be based more on economic interests than on large-scale geopolitical maneuvers. However, this interpretation is also only a point of view, and the reality may be more complicated. When assessing such incidents, a combination of information and analysis needs to be taken into account.