FirstFT: Moody’s cuts China’s credit rating outlook

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Rating agency Moody’s Investors Service has cut China’s sovereign credit rating outlook to negative from stable, citing the growing risks of persistently lower mid-term economic growth and the overhang from a crisis in the property sector.

The agency’s cut in outlook comes as China struggles to address multiple economic challenges following the end of the lockdowns that were enforced throughout the coronavirus pandemic and had a dramatic impact on the country’s economic growth.

A slowdown in the cash-strapped property sector has undermined consumer confidence and a debt crisis in weaker provinces has weakened government finances. Figures released over the weekend showed a sharp rise in the number of defaults by Chinese consumers.

Moody’s said there was increasing evidence that the government and state-owned enterprises would provide financial support to weak regions, “posing broad downside risks to China’s fiscal, economic and institutional strength”.

The agency lowered its outlook to negative from stable while retaining a long-term rating of A1 on the nation’s sovereign bonds, according to a statement.

Here’s what else I’m keeping tabs on today:

• Economic data: US government data is expected to show that job openings edged down to about 9.3mn in October from 9.5mn in September while the Institute for Supply Management’s non-manufacturing index is expected to show activity expanded for the 11th consecutive month in November.

• Results: JM Smucker, Signet Jewelers, Asana, Toll Brothers and entertainment group Dave and Buster’s will report earnings today.

• Congress: FBI director Christopher Wray will press the Democratic-led Senate judiciary committee to renew the agency’s authority to conduct warrantless surveillance outside the US, according to excerpts of his testimony released ahead of his appearance today.

• Educational attainment: The OECD releases its latest Pisa education study based on test results of 15-year-olds’ reading, mathematics and science abilities in 90 countries.

Five more top stories

1. Exclusive: John Kerry has defended the surge in gas production in the US to a new record and maintained his country was a global climate leader after the launch of the Inflation Reduction Act last year. Speaking to the Financial Times as officials met in Dubai to hammer out a new deal to limit global warming, Kerry said not even Donald Trump could roll back the centrepiece of the Biden administration’s economic policy.

2. The US has charged a former ambassador to Bolivia with spying for Cuba in a case that prosecutors are calling one of the most egregious betrayals to have ever taken place at the state department. According to documents unsealed in a Miami federal court yesterday, Victor Manuel Rocha had been acting as “a clandestine agent of the Cuban government” since 1981. Here’s more on the Department of Justice allegations.

3. Israel has defended its conduct in the war against Hamas by touting a high-tech evacuation plan for civilians. Israeli officials say they are adopting a different approach during the latest phase of the war to the one used in the north, where air strikes and then a ground invasion by the Israel Defense Forces killed thousands of civilians.

• More on the conflict: Shipowners have called for more military protection on maritime routes in the Middle East after attacks by Iran-backed Houthi rebels sparked fears of new disruptions to global trade, including of energy supplies.

4. The head of Airbus has said the group “might need some support” from European governments for a new, multibillion-dollar commercial aircraft programme as it gears up to replace its best-selling A320 family of jets. Chief executive Guillaume Faury indicated that Airbus could ask for taxpayer backing to launch a single-aisle aircraft and a shorter-range, hydrogen-powered plane that is expected to enter service in the middle of the next decade. Any new such partnership with European governments could test a 2021 deal to draw a line under years of transatlantic trade disputes with Boeing.

5. Amy Edmondson has won the Financial Times and Schroders Business Book of the Year Award for Right Kind of Wrong, about how to learn from failure and take better risks. Her book won over the judges with its systematic, richly illustrated exploration of how to build on “intelligent failure” and its critique of the craze for failure that often hypnotises entrepreneurs and innovators. Roula Khalaf, the FT’s editor and chair of judges, said Right Kind of Wrong was “a highly readable and relevant book”.

News in-depth

Ron DeSantis’s 2024 US presidential campaign is fighting to regain momentum after several high-profile departures from the powerful spending group backing his bid in the past fortnight. The super Pac Never Back Down has amassed more than $130mn this election cycle to put DeSantis in the White House. His supporters are framing the departures as a reboot but the turmoil comes just weeks before the first votes are cast in the crucial Iowa Republican caucuses.

We’re also reading . . . 

• Artificial intelligence: To achieve true AI governance, mechanisms should reflect democratic values, writes Turing Award winner Yoshua Bengio.

• Geopolitics: Donald Trump’s possible return to the White House poses profound questions about the future of US democracy and the country’s role in the world, argues Gideon Rachman.

• Why Modi is cruising to a third term: Recent state elections show that the Indian prime minister keeps benefiting from the failings of the opposition, writes Ruchir Sharma.

Chart of the day

If any one country had schools that were designed to cope with the Covid pandemic, it would be Finland, which already had a highly digital education system that made the logistics of distance learning surprisingly easy. Yet even in Finland, the impact has been stark, according to a new study by the OECD, which shows an unprecedented global decline in educational attainment between 2018 and 2022.

Take a break from the news

The FT’s culture podcast speaks to production designer Tamara Deverell for a behind-the-scenes look at Priscilla, Sofia Coppola’s film about Elvis Presley’s wife.

Additional contributions from George Russell and Benjamin Wilhelm