The international ratings agency said it was maintaining a positive outlook amid expectations that the world's second-largest economy would remain stable over the medium term.

"The record of the past year demonstrates that China's policy response to the 2008 crisis has been effective," Moody's senior vice president Tom Byrne said in a statement.

"In particular, we premised our action on the ability of the Chinese authorities to protect systemic stability from the underlying threats arising from the extraordinary credit expansion evident in 2009."

Moody's said China's four-trillion-yuan (600-billion-dollar) stimulus plan unveiled during the crisis had "only modestly affected government finances" and the budget deficit was likely to be contained within three percent of GDP this year and next.

Potential losses from a credit surge in 2009 and sharp rises in local government financing are likely to be manageable and China's large pool of national savings has bolstered the government's financial strength, it said.

China's strong external payments position, backed by the world's largest foreign exchange reserve of 2.65 trillion dollars as of the end of September, provide a substantial buffer to global financial market turbulence, it said.

Beijing's capital controls will also help stem speculative cash inflows, it added.

"Only a handful of highly-rated advanced industrial economies such as Norway, Switzerland, Japan, Hong Kong and Singapore have a stronger international investment position than China," the agency said.

The agency forecast China's economic growth to ease to a more sustainable rate -- at around nine to 10 percent this year, and eight to nine percent in 2011.

Moody's said China's largest banks had not been "materially damaged by the global crisis", despite fears that a portion of the 9.6 trillion yuan in loans granted last year could go bad.

It noted that external risks to trade relations may be the most threatening over the near term, including tensions with key trading partners over the value of the yuan.

Separately, the agency upgraded the long-term ratings of three major policy banks -- China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China -- to Aa3 from A1, with a positive outlook.

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