Standard & Poor's raised China's credit rating on Thursday in recognition of the government's light debt load and the "exceptional growth prospects" of the world's second-largest economy.
The upgrade to AA minus from A plus puts S&P's long-term sovereign rating level with Moody's, which moved China up a notch last month.
"The upgrade reflects a positive revision in Standard & Poor's assessment of the risks to China's macroeconomic and financial stability," said S&P credit analyst Kim Eng Tan.
In particular, the agency cited the government's modest indebtedness, a strong external asset position and the economy's rosy outlook.
It said that these strengths more than offset problems in the banking system that could surface if the economy suffered a serious slowdown.
The upgrade was long overdue, said Wang Han, an economist with advisory firm CEBM in Shanghai.
"The ratings improvement is quite normal. They should have done it much more earlier. Look, we have a hefty current account surplus and we never issue bonds without reason," he said.
Standard & Poor's gave China a stable outlook, noting factors that could push its rating up or down.
"We may raise the ratings again if structural reforms lead to sustained economic growth that significantly lifts the average income level," Tan said.
"Conversely, we may lower the ratings if reform efforts weaken, in combination with a markedly weaker economic performance and worsening banking-sector credit metrics than what we currently expect."
Critics have worried that an unprecedented lending surge by Chinese banks during the global financial crisis could result in a pile of bad loans that would weigh on the government's finances.
But in lifting China's rating, Standard & Poor's and Moody's have both given a vote of confidence to the government's handling of the financial crisis.
Fitch now stands alone as the one major agency to rate China at A plus, one notch below both the S&P's and Moody's ratings.
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