US trade war hamstrings China's economic juggernaut
China will likely see slowing economic growth over the next few years as trade issues between the U.S. and the world's next-largest economy keep bubbling to the surface
Depending on how Beijing handles the challenge, its credit rating may be lowered, S&P Global Ratings predicted, which might increase borrowing costs for the President Xi Jinping's government.
"A downgrade could ensue if we see a higher likelihood that China will ease its efforts to stem rising financial risk and allow higher credit growth to support economic expansion in an unsustainable manner," the financial services company said. "We expect such a trend would weaken the Chinese economy's resilience to shocks, limit the government's policy options, and increase the likelihood of a sharper decline in the trend GDP growth rate."
The report comes ahead of high-level U.S.-China trade talks scheduled for October.
The Treasury Department clarified on Saturday that it will not block Chinese companies from listing shares on U.S. exchanges, something that could have given the Trump administration leverage in a standoff with Beijing over tariffs imposed by the White House on billions of dollars in Chinese goods.
China Foreign Ministry spokesman Geng Shuang described the decision as "win-win."
"Engaging in extreme pressure and even attempting to 'decoupling' [sic] the Sino-US economy will inevitably harm the interests of Chinese and American companies and the public, trigger financial market turmoil, and endanger international trade and the growth of the world economy," Geng said.
China will likely be able to keep its real gross domestic growth per capita above 5% annually, which is still slower than in years past, S&P said.