China says S&P credit rating downgrade a "wrong decision"
The ministry said on its website that the decision was "perplexing" as the downgrade came while China's economic growth had gained a firmer footing with improved quality.
S&P said Thursday that it had lowered China's long-term sovereign credit rating to A+ from AA-, because the country's "prolonged period of strong credit growth has increased its economic and financial risks."
Calling the reasoning "cliche," the MOF said it was a pity for S&P to focus on China's fast credit growth and debt issues, but ignore the country's distinctive financing structure, the wealth-creating effect of government spending and its support for growth, as well as sound development fundamentals and growth potential.
"The downgrade is a result of the international rating agency's long-standing mode of thinking, and misreading of the Chinese economy based on developed countries' experience," it said.
China's GDP grew faster than expected in the first half of the year, up 6.9 percent from a year earlier. The growth accelerated from 6.7 percent in 2016, above the government's 2017 full-year target of around 6.5 percent.
In the first eight months, fiscal revenue climbed 9.8 percent from a year earlier, up from the 6 percent rise registered over the same period in 2016. Fiscal spending rose 13.1 percent for January-August, providing strong support for stable growth and economic restructuring, the MOF said.
It said economic growth was expected to remain resilient as the supply-side structural reform and innovation-driven development strategy continued apace.
Addressing concerns over China's debt growth, the MOF said the government had always attached importance to the local government debt problem and would continue fiscal reform to ensure healthy finances.
As of the end of 2016, China's total outstanding government debts, including that of local governments, stood at 27.33 trillion yuan (around 4.14 trillion U.S. dollars), or 36.7 percent of GDP.
The ministry said China was able to maintain stable and relatively fast economic growth while keeping credit at a reasonable level. Credit growth has actually been decelerating.
At the end of August, M2, a broad measure of money supply that covers cash in circulation and all deposits, rose 8.9 percent from a year earlier, with the pace of growth decelerating for the seventh straight month to a new low.
"The S&P downgrade may be a good reminder of the existing inefficiencies in the economy, and the need for expedited reforms, but it's not a reflection of increasing credit risks or worsening economic fundamentals," said Liu Liu, an economist with the China International Capital Corporation (CICC).