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China Reserves Falling Below $3 Trillion Won't Threaten Rating: S&P

  • Main risk with capital outflows, depreciation is over-reaction
  • Reserves are more than ample to meet needs and liabilities

China’s foreign-exchange reserves falling below $3 trillion doesn’t threaten its sovereign credit rating as the economy still has a healthy buffer, according to S&P Global Ratings.

"Reserves are more than ample to meet its external needs and liabilities," Kim Eng Tan, a Singapore-based credit analyst, wrote in a note. "The country’s liquid external assets continue to outsize its total external debt by a comfortable margin, and the current account remains in a surplus position. This cushions the economy against potential shocks."