One of the world's leading credit agencies has cut China's sovereign rating, warning that the planet's second largest economy could be in for a bumpy ride as a domestic credit boom raised the risk to the country's financial stability.
The downgrade, from AA- to A+, is the second by an global rating agency this year.
Ratings agency Standard & Poor's has downgraded China's government debt, citing a sustained period of credit growth which has heightened risks for the country's financial system.
That compares with last year's pace of 6.7 percent, which was the slowest in around a quarter of a century.
S&P pointed to the "prolonged period of strong credit growth" raising the prospect of economic and financial risks to the country.
S&P said that recent efforts by the government to reduce corporate leverage could stabilise financial risks in the medium-term.
"We expect China's economic growth to remain strong at close to 5.8 per cent or more annually through at least 2020, corresponding to per capita real GDP growth of above 5.4 per cent each year. S&P is playing catch-up".
Rising debt levels in China have prompted S&P Global Ratings to become the latest major credit rating agency to downgrade the country's sovereign debt.
The timing is awkward for China's leaders, immediately ahead of next month's Party Congress, and arguably questionable on the basis of recent economic and financial developments, Williams added.
Analysts say China's campaign to cut financial risks this year has had mixed success, and opinions differ widely on whether Beijing is moving fast enough, or decisively enough, to avert the risk of a debt crisis down the road. Fixed asset investment was also well below expectations. "The increases have often been above the rate of income growth", S&P said in a statement.
"It is in recognition of the reality that, concerns notwithstanding, the authorities are not planning to rein in credit growth in a forceful way", said Louis Kuijs at Oxford Economics in Hong Kong.