China’s Debt Problem: Why Fitch’s Downgrade Matters

Created: 2013-04-17 12:54 EST

Category: China > China Focus

Last week Fitch Ratings, one of the big three credit ratings agencies, downgraded China’s long-term local currency debt from AA- to A+. Fitch said they were concerned about structural problems in China’s economy, too much easy credit, and an opaque “shadow banking” system that’s on the rise. What’s the significance of Fitch’s ratings downgrade? How is shadow banking affecting Chinese people? And who will be affected if the unregulated system spirals out of control?