Latest report from the ratings agency

Recent data showing a slowdown in Chinese investment and industrial-production growth could indicate that policy-driven macroeconomic rebalancing is taking effect. The period of adjustment was always likely to see a pick-up in macroeconomic volatility, and a smooth outcome is not assured. However, any sustained rebalancing and a reduction in growth led by credit-fuelled-investment would diminish the structural vulnerabilities factored into the sovereign credit profile.

Chinese macroeconomic data has indicated a sharp economic slowdown in August, with fixed-asset investment (FAI) and industrial production growth both recording multi-year lows. Real estate indicators continued to highlight risks of a more sustained correction, with sales growth in volume and value terms declining from 2013. This comes amid a slowdown in credit expansion evident in aggregate financing data for July and August.

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