2 Attachment(s) The region now ranks a 1, down from AA3. Its outlook is secure. Moody's said the change reflects expectations that China's economic power “will erode somewhat” in the coming years.

Although progress will remain high compared to other sovereigns, Moody's judges that possible development is likely to drop. It expects growth to drop to 5% annualized over the following five years, from around 6.5% now. Moody's also expects an increase in the debt load of the government's as a proportion of Gross Domestic Product.

All up this down grade only burnishes the broadly-held market see that China has has received all the “easy” economic progress it could expect, probably and then some. They're going to be tougher to win and certainly will depend more on the ingenuity and diplomatic ability of Beijing, although major progress gains are still feasible.

Both the New Zealand and Australian Dollars took a winner following the announcement. That is utterly unsurprising given China's huge hyperlinks to the commodity export tale on which equally to levels that are various rely. Central banks in both countries are known to fret publicly that a few of the external elements which may have lately flattered economic efficiency may be momentary.

Moody's motion indicates the boost possibly can anticipate from Chinese development might fade, even when it there's little prospect of it vanishing.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX