China's finance official criticizes rating agencies' 'ideological influences'

BEIJING - China's vice finance minister has accused international rating agencies of basing their ratings on "ideological influences" and urged them to "treat emerging economies fairly and impartially," after Moody's cut its outlook on China's sovereign bonds.

"The move lacks foresight and vision, and practice will prove the decision wrong, as they should not make judgements on China based on Westernized perspectives," said Zhu Guangyao on Friday, on the sidelines of China's annual parliamentary session.

Moody's announced on Wednesday that it had downgraded its outlook on China's sovereign bonds from stable to negative, citing potential weakening in China's fiscal strength, the fall in its foreign exchange reserves, and uncertainty about its policy priorities.

According to official Chinese figures, the country's fiscal deficit in 2015 accounted for 2.3 percent of its GDP, and many international institutions hold that a country's deficit should not exceed 3 percent of its GDP. Finance Minister Lou Jiwei said in late February that there is room to expand fiscal policy and predicted an increased budget deficit this year.

Zhu said this 3-percent "warning line" should not be taken as a uniform standard, and it is mainly applicable to European Union members.

The warning line should vary from country to country based on each country's national conditions, he said.

Zhu expects China's fiscal revenues to go down slightly as a result of tax and fee cuts, saying the country will deal with possible fiscal imbalances by increasing the deficit moderately on a temporary basis.

But from a medium-to-long-term perspective, supply-side structural reform should add new driving forces for China's economy, boosting fiscal revenues, Zhu said.