Fitch 'neutral' on China, flags realty risks

Fitch Ratings said it has a "neutral" outlook on China's economy while flagging persistent risks including property sector woes, forecasting a slowdown in growth next year.

China's economic growth will moderate to 4.6% next year from 5.3% in 2023, the ratings agency said in a Wednesday report titled "Greater China Outlook 2024." While a greater usage of fiscal policy will limit downside risks, Fitch noted such supports may keep fiscal deficits wide at a time when the country's fiscal metrics have already eroded compared to peers with similar sovereign ratings. The commentary comes after the firm affirmed a stable outlook on China's sovereign debt in August. Global investors' interest in rating agencies' views has increased after Moody's Investors Service cut its outlook on Chinese sovereign bonds to negative earlier this month, underscoring concern about growing debt load in the world's second-largest economy. "Policy support, with a potentially greater use of fiscal policy, is likely to be judiciously deployed to limit downside risks," wrote Jeremy Zook, a director at Fitch.

For the property sector, "a sustained recovery is unlikely until there is a meaningful improvement in home buyer sentiment," he added. "Policymakers will face another difficult year of navigating challenges to economic growth from subdued domestic and external demand," Fitch said.