Dagong maintains Hong Kong's AAA credit rating

BEIJING - China's domestic rating agency Dagong Global Credit Rating Co Ltd on Thursday announced that it would maintain the local and foreign currency credit rating of China's Hong Kong Special Administrative Region at AAA with a stable outlook.

Though significantly influenced by the downward global economy, Hong Kong is able to keep its average growth at a relatively high level as its economy is highly complementary to that of the Chinese mainland, Dagong has assessed.

As a small open economy, Hong Kong is sensitive to changes in the external environment, and the worsening European debt crisis, weak recovery of the United States and a growth slowdown in the Chinese mainland have all had an impact on its foreign trade, said Dagong.

It predicted Hong Kong will witness a 1.4-percent economic growth in 2012, mainly boosted by domestic consumption and government-driven infrastructure investment. In 2013, the region's economy is likely to expand by 3.7 percent year-on-year.

Benefiting from its transition toward a high-knowledge economy and close relations with the rapidly growing mainland economy, Hong Kong's economy is expected to stay vigorous and maintain a 3.5-percent annual growth on average in the medium term, according to Dagong.

The SAR's banking system will remain stable due to the government's new round of property market regulation that cracks down on speculation, the agency said.

Dagong sees Hong Kong as likely to maintain a balanced budget and stable debt-paying ability, backed by its sufficient fiscal and foreign exchange reserves.

The increase in future land revenue will make up for the local government's rising expenditure in infrastructure construction and social welfare, and a strict fiscal discipline will offset Hong Kong's fiscal frailty, said Dagong.

Meanwhile, the government's debt-paying ability with both local and foreign currency is very strong with a extremely small debt burden, Dagong added.

According to the agency, Hong Kong's fiscal and foreign exchange reserve accounted for 30.6 percent and 117.6 percent of local GDP by the end of September this year.