PENGYUAN INTERNATIONAL

HONG KONG, 30 Jan 2019. Pengyuan International has published a research report titled Great Mediocrity Characterizes The Creditworthiness of Chinese Provincial Governments, highlighting its finding that the credit quality of more than half of the provincial-level governments in China may be close to peer average.

“Only a few provincial-level governments, likely Beijing, Shanghai and Guangdong may have a credit quality much stronger than the average of peers”, said Liang ZHONG, a Pengyuan analyst.

Chinese provincial governments are facing many challenges nowadays, thus a provincial government may have above-average performance in one or two aspects but underperform in others. Not surprisingly, the credit quality of Chinese provincial governments capturing their relative strength in multiple aspects appears to be converging.

Particularly, the report highlights some revert-to-mean of provinces in terms of economic growth and that some provincial governments in deeper deficit or with heavier debt burden have been taking a relatively more conservative fiscal policy stance, which contributes to the convergence of credit quality of Chinese provincial governments.

“The great mediocrity of Chinese provincial governments in terms of credit quality is unlikely to change materially over the next two years”, added Liang ZHONG, “as it reflects not only the multiple challenges to the Chinese subnational governments, but also the central government intention to have balanced development across the nation.”

The report noted the preliminary nature of the finding, as the assessment took some simplified approaches to measuring the relative credit strength of Chinese provincial governments compared to that required by Pengyuan’s Chinese Local Government Rating Criteria.


Additional information is available on www.pyrating.com

Related Criteria
Chinese Local Government Rating Criteria (29 June 2018)


ANALYSTS CONTACT

MEDIA CONTACTOTHER ENQUIRIES

Primary Analyst

Sovereign and Public Finance

Liang Zhong

+852 3615 8341

liang.zhong@pyrating.com

media@pyrating.com


contact@pyrating.com


Secondary Contact

Chief Analytics Officer

Tony Tang

+852 3615 8278

tony.tang@pyrating.com




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