Latest audit results not to cause China rating downgrade

NEW YORK - Standard & Poor's Ratings Services will not change its rating on China's sovereign debt just because of its recent auditing announcement, a senior credit analyst said Tuesday.

"That has no impact on our rate" on China's sovereign credit, Joydeep Mukherji, managing director in Sovereign Ratings of the New York-based rating agency, told Xinhua, referring to China's latest estimation for its debt.

Liabilities directly carried by governments at various levels stood at 20.7 trillion yuan ($3.4 trillion) at the end of June 2013, representing an 8.6-percent increase from the end of 2012, according to an announcement released by China's National Audit Office last week.

"We do all that exercise and the numbers are still consistent with the rating we have today. So we will not change rating just because of their recent announcement that happened," Mukherji said.

"We have a stable outlook rating (on China's debt) which says that we think the Chinese government has the resources to deal with this, also has the time to deal with this, meaning that we don't expect there would be some kind of liquidity problem," he added.

The analyst also said the government debt is not a threat to China's economic growth.

When asked if there is a relatively safe range of the government debt to its gross domestic product (GDP) ratio, Mukherji said there is not a magic number like that because it depends on the capacity of the government to service the debt.

Mukherji noted that economic growth is an important criterion when his company makes a rating decision on a country.

If the Chinese economy grows by 7.5-8 percent, its capacity to service the debt is extremely strong, he said, voicing his confidence that the growth engine of the world's second-largest economy is still good.

"As long as growth is there, the (Chinese) government would have the money to pay for all their debt one where or another, whether local government debt or its own debt, because the money is coming in," Mukherji said.