share
 

Experts: Moody's outlook cut 'unfair'

0 Comment(s)Print E-mail China Daily, December 11, 2023
Adjust font size:

Photo taken on July 3, 2020 shows the research center of the Chinese e-commerce giant Alibaba on the "AIsland" of Zhangjiang Science City in Pudong New Area, East China's Shanghai. [Photo/Xinhua]

The latest cut to the outlook of major Chinese tech companies by United States-based ratings agency Moody's is "unfair and inappropriate", and the move neglects the immense growth potential of China's digital economy and platform enterprises, experts said.

They added that the rating downgrades could raise concerns about the professionalism of Moody's, and it shows that the ratings agency lacks understanding of China's internet and tech sector.

Moody's recently adjusted the outlook for 18 Chinese companies, including tech heavyweights Alibaba Group Holding and Tencent Holdings, from stable to negative, after it lowered China's credit outlook and the ratings of eight State-owned banks.

Ouyang Rihui, assistant dean of the China Center for Internet Economy Research at the Central University of Finance and Economics, said the Chinese authorities have been supportive toward the digital economy and platform economy, while the understanding of Moody's about China's latest policy development is "inadequate".

"The downgrades underestimate the significant role domestic tech and internet companies have played in bolstering economic growth of China and even the whole world. The move also downplays these Chinese enterprises' technological innovation capabilities and their innovative business models," Ouyang said.

He said the country's supervision of platform enterprises has become normalized, more transparent and predictable, with more targeted efforts to guide them toward better compliance, promote the healthy development of the sector and better serve the real economy.

The government's policy support is expected to shore up investment sentiment and market confidence toward the internet and tech industry, and further consolidate the economic recovery trend, he added.

Zhang Xiaorong, head of the research institute of manufacturing company Deep Innovation, which is based in Shenzhen, Guangdong province, said that Moody's outlook downgrade exaggerates the intensified competition among Chinese tech companies and possible challenges they might face in the future, as well as overlooks the huge potential and resilience of China's economy.

The agency failed to take into consideration the country's recent policy support to tech and internet companies, so its ratings raise doubts. The results reveal some limitations and do not reflect the reality, experts pointed out. Although the move may weigh on the credibility of these enterprises and make it more difficult for them to seek external funding, the overall impact on China's tech sector is limited, they added.

Alibaba and Tencent have reported steady growth in both revenue and net profit.

Alibaba said its total revenue stood at 224.79 billion yuan ($31.4 billion) during the July-September period, up 9 percent year-on-year, driven chiefly by improved consumer sentiment. Its net profits reached 26.70 billion yuan for the quarter ending Sept 30, compared with the net loss of 22.47 billion yuan in the same quarter in 2022.

Tencent reported its revenue rose 10 percent year-on-year to 154.6 billion yuan in the third quarter.

"Chinese tech and internet companies have made great strides in bolstering the innovation of business models and application of cutting-edge digital technologies, including big data and algorithms, with various industries in recent years," said Liu Xiaochun, executive director of the Chinese Academy of Social Sciences' Internet Law Research Center.

They should seize the opportunities presented by a new round of scientific and technological revolution, bolster industrial upgrade and foster new growth drivers, Liu added.

Follow China.org.cn on Twitter and Facebook to join the conversation.
ChinaNews App Download
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter