S&P Global Holds China's A+ Credit Rating Stable Amid Property Slump and Trade Tensions

S&P Global held steady on China's long-term sovereign credit rating, keeping it at A+ with a stable outlook. The move comes as the world's second-largest economy navigates mixed signals from slowing property markets and ongoing trade tensions with the United States.

The ratings agency highlighted Beijing's hefty fiscal stimulus efforts as a key factor supporting economic resilience. Despite headwinds from the property slump and tariffs shaking exports, S&P expects China to bounce back to an annual growth track north of 4% within a year or two. This anticipated rebound would give policymakers room to dial back emergency stimulus packages gradually over the coming years.

That "stable" outlook suggests no immediate rating shifts are on the horizon - unless the government opts for even more aggressive fiscal support stretching beyond the next few years, which could risk a downgrade. Conversely, if China manages to tighten its fiscal belt faster than expected, a rating upgrade isn't off the table.

S&P also confirmed China's short-term credit ratings at "A-1" in both foreign and local currency categories, underscoring the country's overall creditworthiness despite external pressures.

China's Finance Ministry expressed satisfaction with the reaffirmed ratings, promising flexible policy tools to meet its annual growth targets. This contrasts with the more cautious stance seen earlier this year when Fitch cut China's rating, citing ballooning government debt and concerns over public finances amid U.S. tariff shocks.

Second-quarter data showed some optimism, with GDP growth slightly outpacing forecasts. However, July painted a more complicated picture: manufacturing shrank for a fourth consecutive month, yet exports surprisingly surged, hinting at uneven recovery forces at play.

No wild swings in the credit ratings here - just the steady hand of a giant economy managing its way through a tricky patch.