Hong Kong, July 31, 2018 -- Moody's Investors Service has published the latest edition of its
"Inside China" newsletter, which compiles key China-related
research published over the last few months.
This month's leading article looks at how China's authorities
have defined and implemented reforms to address overcapacity and elevated
leverage, while aiming to shift economic activity towards higher
value-added sectors.
If such measures lead to a reallocation of labour and capital resources
that shifts credit towards sectors with higher productivity growth,
it will support the Chinese government's credit quality by increasing
its debt-carrying ability.
A second article looks at how high-tech sectors are key to China's
economic growth plan.
The country aims to develop its high-tech sectors in order to drive
higher productivity and economic growth.
With significant financial and policy means, including the ability
to support its large state-owned companies as implementers of its
high-tech vision, China will stay focused on cultivating
increasingly competitive high-tech sectors, even as the likelihood
increases that the US will restrict Chinese companies' access to
technology.
A third articles looks at the tepid growth prospects for China's asset
management industry, as the government is imposing stringent regulation
to reduce risk in the financial system -- a top government
priority for 2018.
Moody's views this development as credit positive because it will
improve risk control in the asset management industry.
The newsletter also looks the state of subsidies for renewable energy
and argues that the sector will continue its growth in the next five years,
but at a controlled pace.
Other articles look at the power and financial sectors.
Articles in the latest edition include:
Government of China: Change in China's economic structure is gathering
pace, a credit positive
Cross-Sector - US and China: China is focused on developing
its tech sectors despite risk of US restrictions
Investment Funds -- China: Long-term trends are positive,
even if regulation slows short-term growth
Renewable Energy -- China: Policies support renewable sector's
growth, but challenges ahead
China - Power : Regulatory and operating challenges constrain
credit quality of coal-fired gencos
Banks - China: Smaller banks face continued funding weakness
as use of structured deposits grow
Life Insurance - China: Improving product mix and stabilizing
asset risks drive change to stable outlook
Subscribers can read the full report at:
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1134218
The report may also be found through Moody's topic page "China's trade-off:
Deleveraging and stability", available at http://www.moodys.com/chinarebalancing.
This page provides a centralized source for Moody's research related to
key credit issues in China as the country's macroeconomic story continues
to unfold.
Recent Moody's publications relating to China's trade-off include:
• Mass transit sector -- China: China's new policy
on metro construction is positive for sector development
• Auto ABS -- China: Auto lease ABS transactions
face incremental risks compared to auto loan deals
• Government of China -- A1 stable: Annual credit
analysis
• Property -- China: Rated high-yield
developers' liquidity remains tight
• Renminbi Bonds Monitor: June 2018
• Semiconductors -- Korea and China: Korean chipmakers
will maintain tech leads despite China's efforts to catch up
• Banks -- China: Quarterly snapshot of credit
profiles
• Banks -- China: Easing macro risks drive positive
rating actions
• ABS -- China: New supervisory structure for
leasing companies is credit positive
• Renewable Energy -- China: Policies support
renewable sector's growth, but challenges ahead
• Banks -- China: Smaller banks face continued
funding weakness as use of structured deposits grows
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This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.
Chris Park
Associate Managing Director
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077