China Is Downgraded Due to Debt

China stocks fell and the yuan weakened Tuesday after Moody's lowered the credit rating for the world's second-largest economy.
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China stocks fell and the yuan weakened Tuesday after Moody's Investors Service lowered the credit rating for the world's second-largest economy amid concerns for rising debt levels and slowing growth.

Moody's clipped China's rating by one notch, taking it to A1 from a previous grade of Aa3, marking the country's first downgrade in nearly 30 years. Moody's said the new rating outlook is stable, however, and said the country remains resilient to negative shocks and that growth is likely to remain comparably strong in the near-term.

However, Moody's said the downgrade "reflects the expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows."

READ MORE: China Downgrade Trims Stocks, Yuan as Moody's Cautions on Growth and Debt

This article was written by a staff member of TheStreet.