(Yicai Global) Aug. 15 -- US President Donald Trump signed an executive memorandum yesterday authorizing US trade representatives to investigate China for unfair trade practices.
In response, Moody's Investors Service commented that the investigation will not affect China's sovereign credit quality in the short term.
If the US moves towards China's trade are in line with previous WTO agreements, the overall framework for trade between the two countries will not change, Moody's noted, adding that, as a result, it expects that the US investigation will not affect China's sovereign credit quality in the short term.
China's GDP growth is largely dependent on domestic demand, so the US measures in specific areas are unlikely to significantly affect China's economy, Moody's noted.
At the same time, Moody's also said that if the US does take adverse measures, the agency will consider the impact of these and China's potential response.
Moody's believes the US is unlikely to introduce important measures with great impact, but if it does, this may cause widespread consequences for the US and Chinese exporters, thus constraining China's long-term technology-driven growth, and applying downward pressure on China's overall future growth prospects, which will have a negative effect on its credit quality.