BEIJING — Despite a slowdown in growth, China still has enough resources to address economic imbalances without a disorderly adjustment, ratings agency Fitch said in its latest report.
A disruptive adjustment in China would have negative repercussions for the broader Asia Pacific region, as would a sharp depreciation in the Chinese yuan, Fitch said on Dec 6.
“We believe China still has the administrative and financial resources to address these imbalances without a disorderly adjustment, even though its capacity to do so diminishes with time if not addressed,” it added.
Vulnerabilities have built up in China with debt levels across the economy continuing to rise, it cautioned.
Fitch said it expects economic activity in the Asia Pacific region will generally hold up well, even as many Asian emerging markets have been severely hit by sluggish world trade due to their relative openness.
The median for Fitch’s real 2017 GDP growth forecasts for the 11 emerging markets in Asia, including China, India and Vietnam, is 5.5 percent, substantially higher than in other regions, noted the report.
Despite challenges, China is transitioning to a service and innovation-driven economy from an export-reliant one, with the economic growth rate holding steady at 6.7 percent for the first three quarters this year.