S&P Global gives China rating warning over virus spending splurge

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© Reuters. People wearing masks are seen at a square in Shanghai© Reuters. People wearing masks are seen at a square in Shanghai

LONDON (Reuters) – S&P Global (NYSE:) warned China on Thursday that its credit rating or its outlook could be downgraded if the government tried to offset the economic impact of the coronavirus with a spending splurge.

S&P currently rates China at A+ with a stable outlook. “The more important threat to China’s sovereign credit standing may emerge if the government becomes eager to prop up growth with heavy stimulus measures,” it said in a new report.

“Such a development…could lead to a negative rating action.”

The firm has estimated that the coronavirus outbreak will lower Chinese real GDP growth in 2020 to 5.0%, from a previous forecast of 5.7%. It sees the negative impact as temporary and expects growth will rebound to 6.4% in 2021.

(This story was refiled to tweak headline)

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