Ratings agencyMoody’sslapped a downgrade warningon China’s credit rating on Tuesday,saying costs to bail out localgovernmentsand state firmsandcontrol itsproperty crisiswould weigh on the world’s No. 2 economy.
The downgrade reflects growing evidence that authorities will have to provide more financial support for debt-laden local governments and state firms, posing broad risks to China’s fiscal, economic and institutional strength,Moody’ssaid in a statement.
Historically, about one-third of issuers have been downgraded within 18 months of the assignment of a negative rating outlook.
“The outlook change also reflects the increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector,” Moody’s said.
China’s blue-chip stocks slumped to nearly five-year lows on Tuesday amid worries about the country’s growth, with talk of a possible cut by Moody’s denting sentiment during the session, while Hong Kong stocks extended losses.
China’s major state-owned banks, which had been seen supporting the yuan currency all day, stepped up US dollar selling very forcefully after the Moody’s statement, one source with knowledge of the matter said.
The yuan was little changed by late afternoon.
The cost of insuring China’s sovereign debt against a default rose to its highest since mid-November.
“Now the markets are more concerned with the property crisis and weak growth, rather than the immediate sovereign debt risk,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong.
US-listed shares of Chinese companies fell, with Baidu off 0.5%, Alibaba Group Holding down 1.1%, and JD.com Jdropping 1.9%.
The move by Moody’s was the first change on its China view since it cut its rating by one notch to A1 in 2017, also citing expectations of slowing growth and rising debt.
Essential weekly read to fuel business lunches.
Please provide a valid email address.
By clicking above you agree to the Terms of Use and Privacy Policy.
Thanks for signing up!
Never miss a story.
WhileMoody’saffirmedChina’s A1 long-term local and foreign-currency issuer ratings on Tuesday — saying the economy still has a high shock-absorption capacity — it said it expects the country’s annual GDP growth to slow to 4.0% in 2024 and 2025, and to average 3.8% from 2026 to 2030.
Moody’s main peer, S&P Global, said later in a long-scheduled global outlook call that its big concern was that “spillovers” from any worsening in the property crisis could push China’s gross domestic product growth “below 3%” next year.
Moody’s outlook downgrade comes ahead of the annual agenda-setting Central Economic Work Conference, which is expected around mid-December, with government advisers calling for a steady growth target for 2024 and more stimulus.
Analysts say the A1 rating is high enough in investment-grade territory that a downgrade is unlikely to trigger forced selling by global funds.
S&P and Fitch, the other major global rating agency, both rate China A+, the equivalent of Moody’s A1, and have stable outlooks.
China’s Finance Ministry said it was disappointed by Moody’s decision, adding that the economy will maintain its rebound and positive trend.
It also said property and local government risks are controllable.
“Moody’s concerns about China’s economic growth prospects, fiscal sustainability and other aspects are unnecessary,” the ministry said.
Most analysts believe China’s growth is on track to hit the government’s target of around 5% this year, but that compares with a COVID-weakened 2022 and activity is highly uneven.
The economy has struggled to mount a strong post-pandemic recovery as the deepening crisis in the housing market, local government debt concerns, slowing global growth and geopolitical tensions have dented momentum.
A flurry of policy support measures have proven only modestly beneficial, raising pressure on authorities to roll out more stimulus.
“We spent the better part of three years watching China have this sort of off-and-on reopening from the pandemic, and this was the year they finally sort of officially reopened,” said Art Hogan, chief market strategist at B Riley Wealth in New York. “But the pace at which the economy has recovered from that has been disappointing.”
Analysts widely agree that China’s growth is downshifting from breakneck expansion in the past few decades.
Many believe Beijing needs to transform its economic model from an over-reliance on debt-fueled investment to one driven more by consumer demand.
Last week, China’s central bank head Pan Gongsheng pledged to keep monetary policy accommodative to support the economy, but also urged structural reforms to reduce a reliance on infrastructure and property for growth.
After years of over-investment, plummeting returns from land sales, and soaring costs to battle COVID, economists say debt-laden municipalities now represent a major risk to the economy.
Local government debt reached 92 trillion yuan ($12.6 trillion), or 76% of China’s economic output in 2022, up from 62.2% in 2019, according to the latest data from the International Monetary Fund.
In October, China unveiled a plan to issue 1 trillion yuan ($139.84 billion) in sovereign bonds by the end of the year to help kick-start activity, raising the 2023 budget deficit target to 3.8% of gross domestic product from the original 3%.
The central bank has also implemented modest interest rate cuts and pumped more cash into the economy in recent months.
Nevertheless, foreign investors have been sour on China almost all year.
Capital outflows from China rose sharply to $75 billion in September, the biggest monthly figure since 2016, according to Goldman Sachs.
Tennessee‘s Nico Iamaleava has been cleared medically to play Saturday against Georgia and is set to return as the Vols’ starting quarterback, sources told ESPN.
Iamaleava, a redshirt freshman, missed the second half of the 33-14 win over Mississippi State last week after suffering a blow to the head. He was listed as questionable earlier this week on the SEC availability report but has been removed in the latest report.
Iamaleava practiced this week, including team periods, and there was optimism among the staff that he was trending in the right direction and would be able to play. But the final call was made by medical personnel. Iamaleava was examined by doctors for what sources told ESPN were concussion-like symptoms after leaving the Mississippi State game. He did not return to the sideline for the second half.
Tennessee coach Josh Heupel said on Monday that he felt like Iamaleava would be in “great shape for Saturday” and noted that Iamaleava was with the team earlier Monday morning for meetings and team activities. The Vols’ first full-scale practice was Tuesday.
Iamaleava was having his most productive outing against an SEC team this season before leaving the game against Mississippi State. He completed 8 of 13 passes for 174 yards, no interceptions and a pair of touchdowns as Tennessee built a 20-7 halftime lead. In Iamaleava’s previous five SEC games, he had accounted for three touchdowns and turned it over five times. He was also sacked 15 times in those five games.
Redshirt senior Gaston Moore filled in for Iamaleava in the second half last week and finished 5-of-8 for 38 yards with no touchdowns or interceptions.
Getting Iamaleava back for the Georgia game is big news for Tennessee, which is right in the middle of the SEC championship race and College Football Playoff picture.
Receiver Dont’e Thornton (hand) has also been given the green light to play for Tennessee after earlier being listed as questionable.
Week 12 is here as we take a look at an SEC matchup that has College Football Playoff implications, learn about three of the nation’s top passers who all played under the same coach and see what’s going on in the Big 12.
No. 7 Tennessee will visit Sanford Stadium as it takes on conference opponent No. 12 Georgia on Saturday night. With so much at stake, what can each team improve on ahead of this SEC showdown?
The Big 12 has six teams in the hunt for a spot in the conference title game. With the final CFP rankings coming out in less than a month, what scenario looks most realistic for the conference in terms of how many of its teams could make the 12-team field?
Our college football experts preview big games and storylines ahead of the Week 12 slate.
It has been a historic (and dominant) season for Tennessee’s defense, which has yet to give up more than 19 points in any of its nine games. Against SEC competition, the Volunteers lead the conference in scoring defense, giving up 16.7 points per game, and also lead the way in third-down defense and red zone defense. In other words, they’ve given up very little of anything on defense and are buoyed by a line that’s both talented and deep. Tennessee plays a ton of players up front and has been especially good at forcing key turnovers. In 23 trips inside its own 20-yard line, the Vols have forced six turnovers.
The reality is that Tennessee has played to its defense for much of this season out of necessity. The offense has lacked consistency and struggled to generate explosive plays, particularly in the passing game. It’s not all on redshirt freshman quarterback Nico Iamaleava, either. Iamaleava has thrown only five touchdown passes in six SEC games, and the Vols are tied for 10th with an average of 7.5 yards per completion. Iamaleava, who sustained a head injury in a win over Mississippi State last week, has been the victim of poor pass protection at times, and his receivers have dropped some costly passes. Iamaleava has also been shaky when it comes to overthrowing receivers and occasionally holding onto the ball too long.
The bright spot on offense for Tennessee has been running back Dylan Sampson, who has a school-record 20 rushing touchdowns. He has been a constant for the Vols on offense and has an SEC-leading 772 rushing yards and 11 touchdowns in conference play. As good as he has been, the Vols are probably going to need more from their passing game to win in Athens. — Chris Low
The Bulldogs didn’t do much of anything well in last week’s 28-10 loss at Ole Miss, which was the first time in a long time that Kirby Smart’s team was manhandled on the lines of scrimmage.
The good news for Georgia: It’s heading home to Sanford Stadium for the first time in more than a month. Georgia hasn’t dropped back-to-back games in the regular season since 2016, Smart’s first season, and it has bounced back after each of its past eight losses. The Bulldogs have won seven of their past eight games against the Volunteers.
For all of quarterback Carson Beck‘s turnovers, Georgia’s problems on offense probably start up front. The offensive line hasn’t done a good job of protecting him, and the Bulldogs’ lack of a potent running game has prevented them from effectively utilizing play-action passes. Their banged-up offensive line is going to face another formidable defensive front Saturday. Georgia has 27 dropped passes, fourth most in the FBS, according to TruMedia, so its receivers need to become more reliable as well. — Mark Schlabach
The coach behind three of college football’s top passers
North Texas coach Eric Morris coached Ward at Incarnate Word and Washington State, recruited Mateer to the Cougars and signed Morris out of the transfer portal this offseason. All three hailed from Texas and are putting up big numbers this season. Morris, a Mike Leach disciple, knows what he’s looking for when it comes to QBs.
For each one, the journey was different. Ward was a zero-star recruit out of West Columbia, Texas, played in a wing-T offense and had no scholarship offers. But he showed up to Incarnate Word’s camp in 2019 and impressed with his quick release and accuracy. Morris saw appealing traits, too, in Ward’s multisport talents.
“He was such a good basketball player,” Morris said. “He was a bigger guy who could really handle the ball and move with ease. He had a twitch and quickness about him that was almost Mahomes-esque, where he’s not fast but you see him get out of the pocket and scramble and he’s nifty on his feet. He saw the floor great and shot the basketball great.
“It might be easier at an FCS school to take that risk, but it was something we were really confident in.”
Ward came in with extreme confidence, telling coaches he’d win the starting job over their returning all-conference player (and he did). He followed Morris to Pullman, Washington, out of loyalty to the coach who believed in him. Now he’s playing on a big stage, chasing a College Football Playoff bid and a Heisman Trophy with the No. 9 Hurricanes.
“It’s been fun to watch him flourish and get rewarded for being patient all these years,” Morris said.
When Morris left UIW to become Washington State’s offensive coordinator in 2022, he brought Ward but needed another QB. On his first recruiting trip in Texas, he stopped by to check out Mateer. The two-star recruit had a prolific senior season at Little Elm High School but was committed to Central Arkansas. Morris didn’t understand what FBS programs were missing and convinced Mateer to flip.
After two seasons behind Ward, Mateer has emerged as one of the top dual-threat QBs in college football with 2,332 passing yards, 805 rushing yards (excluding sacks) and 33 total TDs.
“I think the sky’s the limit,” Ward said. “He’s just so dang hard to tackle in the open field. Just a kid that loves ball and was under-recruited. The tide’s turned and he ends up being a big-time ballplayer.”
Chandler Morris was not an under-the-radar talent, but he’s having his best season yet at North Texas. He began his career at Oklahoma, won the starting job at TCU in 2022, sustained a knee injury in its season opener and then watched Max Duggan lead the Horned Frogs to the national title game.
Morris had a six-game stint as TCU’s starter last season before injuring the same knee. At UNT, he’s leading the nation’s No. 3 passing offense with 3,244 total yards and 30 TDs. Like Ward and Mateer, he processes information quickly, makes plays with his feet and throws outside the pocket with accuracy. If you ask Eric Morris, those traits are a must in today’s game. When paired with his version of Air Raid ball, you get big-time results.
“It’s been fun to see him get his swagger back,” Morris said.
Eric Morris points to Patrick Mahomes, Lamar Jackson and Jayden Daniels. The QBs thriving at the highest level are becoming unstoppable by creating plays out of the pocket. And so are his guys.
“Everybody obviously watches Cam and the magic he makes,” Morris said, “but I think all three of ’em can make plays when it’s not a perfect play call. There are a bunch of really good pure passers nowadays, but that’s what sets them all apart.” — Max Olson
What’s going on in the Big 12?
Two-thirds of the way through the Big 12 schedule, six teams are still in the hunt for a title-game appearance: BYU (6-0), Colorado (5-1), Arizona State, Iowa State, Kansas State and West Virginia, all of which are 4-2. There are too many variables to discuss all the scenarios, but the conference has a straightforward tiebreaker policy.
It’s possible to come up with scenarios in which the Big 12 could get two bids, one bid or shut out altogether.
For the Big 12 to get two bids, BYU probably would have to finish 12-0, then lose a close game in the championship to a two-loss team (Colorado, Iowa State or Kansas State). A 12-1 BYU team would get consideration, but it would become a question of how far it would fall and what else happens around the country.
The most likely scenario is the Big 12 will get one team in: whichever one wins the conference title game. If BYU wins out, it will have a bye, but if it slips up even once — or if another team wins the title — Boise State might be in position to get a first-round bye, assuming the Broncos win out.
The doomsday scenario in the Big 12 is if the conference champion has two or three losses and Army and Boise State win out. If that’s the case, there is a good possibility both of those schools would be ranked ahead of the Big 12 champion and the Big 12 would be left out. — Kyle Bonagura
Quotes of the Week
“They’re stubborn, man. They’re physical. He is an elite runner. The runs they run are sometimes nontraditional. They run some runs that other people don’t run because of the space in the box. He’s very patient. He hits small creases. He’s hard to tackle. How many touchdowns has he got in the SEC? Twenty-something? That’s crazy. In the SEC? The SEC is the hardest league in the world to run the ball in on because they’ve got the most size defensive lineman, and he continues to do it at a crazy pace to me.” — Kirby Smart on Volunteers tailback Dylan Sampson.
“I never try to take a step back. I try to take a step up. I’m always putting my head out the window. I’m trying to see around the corner, not trying to see straight ahead. It’s normalcy for everybody to see what’s in front of them. I’m trying to see around the corner. That’s the relationship I have with the Lord, to help me see around the corner so I can help navigate these young men as well as the women that’s attached to our program to a better way and a better life. So I don’t get caught up in the ‘You go, boys!’ or the ‘You ain’t nothing.’ You know, if I would’ve listened to you guys earlier, I’ve gotta listen to you now. So I might as well just put some headphones on and block you out. Notice I don’t have a sponsor for headphones, but that would’ve been a good placement for a sponsor.” — Deion Sanders when asked if he takes time to step back and appreciate the magnitude of Colorado’s turnaround.
“I hope anyone who has ambitions about playing in the National Football League, let’s see what you’ve got against Clemson. Let’s see you play your best game here. If you weren’t focused for Virginia, which I can’t imagine you weren’t — and I’m not saying anybody was not focused — but if they didn’t get your focus, I imagine Clemson will get your focus when you put the tape on.” — Pitt coach Pat Narduzzi on whether playing Clemson gets the attention of his players.
On today’s informative episode of Quick Charge, we’ve got Honda engineers Jason Hwang and Emilio Sanchez to talk us through some of the things that make the GM Ultium-based Honda Prologue EV feel like a real Honda, and why that matters.
Jason and Emilio talk about some of the choices they made to make the Honda Prologue and Acura ZDX feel different from its GM-branded cousins, and explain why this was much more than a case of badge-engineering. Give it a listen, then let us know what you think of the Prologue and ZDX in the comments.
Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Learn more by clicking here.
New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonus audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news!
Got news? Let us know! Drop us a line at tips@electrek.co. You can also rate us on Apple Podcasts and Spotify, or recommend us in Overcast to help more people discover the show!