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Beijing (AFP) Nov 10, 2010 A Chinese credit rating agency whose bid to enter the US market was turned down has downgraded the rating of the United States over the Federal Reserve's stimulus plan, state media said. Dagong Global Credit Rating on Tuesday downgraded the local and foreign currency long-term sovereign credit rating of the United States from AA to A+ with a "negative" outlook, the Xinhua news agency reported. The agency said the downgrade reflected the "deteriorating debt repayment capability" of the US, according to the report. "The serious defects in the US economy will lead to long-term recession and fundamentally decrease national solvency," Xinhua quoted Dagong as saying. The Chinese rating agency said the Fed's plan to inject 600 billion dollars into the struggling US economy would lead to a further depreciation of the dollar and was "entirely counter to the interest of the creditors". Beijing has sharply criticised the Fed's move, with a string of comments from Chinese government officials and state-run media. China and other emerging economies worry that much of the new US money will flood their financial markets, with players seeking higher non-dollar returns. Dagong, one of China's largest credit rating agencies, gave the Chinese government a higher debt rating than the US, Britain and Japan in a sovereign credit risk report covering 50 nations it published in July. In September, it accused the US Securities and Exchange Commission of discrimination and threatened legal action after its application to enter the US market was turned down. Dagong had said it hoped to enter the US market partially in order to protect China's interest as the largest creditor of the US government, with 868.4 billion dollars in US Treasury bonds and notes as of end-August.
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