(The following was released by the rating agency)
Link to Fitch Ratings' Report: Scenario: China Rebalanced;
What a Rebalanced China Would Mean for Corporates
SINGAPORE/HONG KONG/LONDON, January 23 (Fitch) In its new
"China Rebalanced" scenario report published today, Fitch says
that Chinese State-owned Enterprises' (SOEs) ratings, which are
typically notched-down from the sovereign rating (foreign
currency 'A+'/Stable) to reflect forms of state support, would
be most affected in a rebalanced consumer-led, rather than
investment-led, economy as the central government re-prioritises
its support for strategic industries.
Some corporate entities would migrate from the 'A' rating
category to lower levels, while stronger entities may stay
capped by the sovereign rating. Industries that had fuelled the
previous investment-led economy, like steel and aluminium, would
see their ratings transition to representative 'BBB' and 'BB'
rating categories according to company specifics as the economy
Conversely, rated SOEs in the telecom and oil and gas
sectors, which are also unlikely to remain among state-supported
industries, could stay relatively unchanged with strong
stand-alone ratings likely to remain in the 'A' rating category.
Whatever the speed of economic transition, today's report
focuses on the likely changes and out-turns that may occur for
selective industries if rebalancing occurs. This also requires
domestic institutional reform - a factor which is regarded by
Fitch to be one of the single largest threats to financial,
political and social liberalisation and development of the SOEs
and privately owned corporate sector under China's prospective
rebalancing of its economy.
The full report, "China Rebalanced: What a Rebalanced China
would mean for Corporates," is available at www.fitchratings.com