Fitch Rules Out China Hard Landing But Warns Financial Stess Is Mounting

By Markets MarketWatch Pulse

China is not headed for a hard landing any time soon but stress in the financial system is mounting as debt outpaces gross domestic product expansion, according to Fitch Ratings. "China has the administrative and financial resources to avoid a disruptive slowdown to near-zero growth over the rating outlook horizon of about two years," said Fitch. Still, the country's high level of leverage is a source of systemic vulnerability and it could lead to a deterioration in asset quality in the banking sector, the ratings agency said. Meanwhile, it criticized the lack of clarity in the government's reform agenda and predicted a gradual restructuring of state-owned companies via asset swaps and mergers. Fitch rates China at A+.

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