HKSAR govt says it disagrees with Moody's downgrade decision
Published: Dec 06, 2023 11:55 PM
A view of Hong Kong Photo: VCG

A view of Hong Kong Photo: VCG

The government of the Hong Kong Special Administrative Region (SAR) has said it disagrees with a Moody's report that changes its outlook to negative from stable, saying linkage with the Chinese mainland should not be a rating constraint as it is a source of strength for Hong Kong.

Moody's on Wednesday downgraded its outlook on Hong Kong to negative from stable, one day after it cut the credit outlook for the Chinese mainland.

China's Ministry of Finance on Tuesday expressed disappointment about the downgrade, saying the concerns about China's economic growth prospects and fiscal sustainability are "unnecessary."

"We disagree with its decision which is based on the grounds of tight linkage of credit profiles with the mainland and the potential spillovers from the developments in the mainland," the HKSAR government said in a statement posted on its official website on Wednesday.

Hong Kong's deepening and expanding economic and financial ties with the Chinese mainland should not be a rating constraint, the statement said. "On the contrary, these ties are a source of strength for Hong Kong's long-term development."

The HKSAR government noted that the Chinese mainland will continue to be an important engine of global economic growth and is firmly on track to grow by at least 5 percent this year, which will outpace many other economies.

The HKSAR government also pointed out that Moody's has made unfounded comments on its high-degree of autonomy, its political and judicial institutions, the implementation of the National Security Law (NSL) and changes to the electoral system, noting that with the central authorities' commitment to upholding One Country, Two Systems in the long run, the core strengths of Hong Kong as an international financial and trade center will remain.

Contrary to what Moody's has suggested in its assessment, the implementation of the NSL has put an end to the chaotic situation and serious violence that occurred between June 2019 and early 2020, and restored stability and increased the confidence in Hong Kong, thereby allowing the city to resume its normal operation and return to the path of development, the statement said.

While the number of foreign companies in Hong Kong has remained stable at around 9,000, the deposits in Hong Kong's banking system stood at about $2 trillion at end of November this year, which is about 10 percent higher than it was prior to the implementation of the NSL, the statement noted.

"The strengths of Hong Kong have withstood different tests over time, and will continue to do so in the future," the HKSAR government said.

"The fundamentals sustaining China's sound economic growth in the long run are unchanged and will not change in the future. We have the confidence and ability to realize long-term steady development. Concerns expressed by Moody's over China's economic prospects and fiscal sustainability are unnecessary," Chinese Foreign Ministry spokesperson Wang Wenbin told a regular press conference on Wednesday.

"Just as some friends from the business community have said, China has become a synonym for the best investment destination. The 'next China' is still China," Wang said.

The ratings agency also changed the outlook for Macao to negative from stable, Moody's said in a separate statement.

Global Times