Photo taken on July 2, 2022 shows the view of a commercial street in Wuhan, Central China's Hubei Province. Photo: Xinhua

US rating agency Moody's downgraded its outlook on China's credit rating to negative from stable on Tuesday. The Chinese Ministry of Finance responded with restraint, expressing "disappointment" but refraining from using stronger language. Instead, they highlighted the positive trends in China's economic recovery and the continued growth of fiscal revenue. I believe this attitude is commendable.

It is worth noting that Moody's also lowered the US credit rating outlook from "stable" to "negative" last month. The US Treasury Department similarly expressed disagreement with Moody's decision, claiming that US treasury securities remain the world's preeminent safe and liquid asset.

The downgrade of a country's sovereign credit rating or outlook by a rating agency is often likened to a reduction in credit card limits. Such downgrades can potentially increase the cost of international financing for the affected country. However, the impact of a single credit rating downgrade is limited, and the future of China's international financing will be determined by various factors. We do not need to be overly fixated on Moody's downgrade.

Moody's cited risks related to China's local government debt and real estate sector. It also predicted a continued slowdown in China's economic growth, with an average growth rate of 3.8 percent from 2026 to 2030. While there is uncertainty in the Chinese economy, Moody's forecast is clearly one of the most pessimistic. We cannot expect a US rating agency to go out of its way to instill confidence in China. This is a task that China must undertake itself.

We probably don't need to dwell on why Moody's is so pessimistic about the Chinese economy, and I especially disagree with investing energy into arguing whether this is a "conspiracy." I believe the most important thing is to focus on our own affairs, solidify the positive trend of China's economic recovery after the pandemic, and unleash the true potential of our economy. By resolving the risks associated with local government debt and real estate, we will compel Moody's to revise its outlook on China's prospects. Otherwise, it will suffer a blow to its market reputation.

Following Moody's downgrade of China's rating outlook, Bloomberg cited global macro strategist Viraj Patel who stated that these downgrades often mark a low in terms of bad news and market selloffs. He also said that it's hard for things to get worse given that expectations are already bearish, and it won't take much to see a rebound.

It is important to note that confidence in domestic assets and among the general public in China is currently relatively low. I believe it is more important to boost domestic confidence than to focus on Moody's rating downgrade. The impact of China's domestic confidence on assessments by Moody's and other rating agencies is undoubtedly greater than that of the downgrade on Chinese society. Moreover, the confidence of Chinese society will be directly reflected in our social and stock market investments.

The country has recently implemented a series of measures to boost the economy, including measures to strengthen confidence and stabilize expectations. These measures are gradually taking effect, but the speed of their effectiveness is not ideal. This is the real problem that we should address with greater effort.

Nowadays, everyone talks about politics and the bigger picture, but what is the biggest political issue and the bigger picture at present? We must be very clear: It is to further boost the economy and truly inspire confidence throughout society. We must make the people believe that we can calmly face external challenges, continuously achieve sustainable and high-quality development, and make everyone believe that our economy will become more prosperous, without experiencing a severe slowdown. Our national strength will increase, the business environment for enterprises will improve, and the general public will earn more money. It is more important to foster such optimistic expectations than anything else.

However, I have noticed that despite the country's efforts to boost the economy and strengthen confidence, there are still some institutions and influential figures who occasionally make negative remarks, which hinder the efforts to restore confidence. This shows that our unity in thinking is still insufficient. I believe that resolving these issues is much more important than being upset with Moody's over the adjustment of its rating. Moreover, we have the means and tools to address these issues in our own hands.

I am confident in China's prospects. As a large country, we have essentially completed industrialization, with many infrastructure projects ranking among the best in the world. We also have considerable capabilities in important technological areas. We have no reason not to continue achieving strong economic and social development. The pandemic and its lingering effects, combined with other issues, have made the situation appear more challenging. However, China, led by the CPC, is oriented toward problem-solving and we will never allow ourselves to be criticized or underestimated while doing nothing. The thriving situation before the pandemic will surely return for all of us.

The author is a media professional. opinion@globaltimes.com.cn