China dismisses Moody's downgrade decision

China's Finance Ministry on Wednesday dismissed a decision by international rating agency Moody's to downgrade China's long-term local currency and foreign currency issuer ratings.

Moody's said early Wednesday that it had downgraded China's long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative.

The downgrade is based on the "pro-cyclical" rating approach which is "not appropriate," the Ministry of Finance (MOF) said in a written statement.

Moody's said China's economy-wide leverage will increase further over the coming years, planned reform program is likely to slow, but not prevent, the rise in leverage, and sustained policy stimulus will contribute to rising debt across the economy.

"These viewpoints overestimate the difficulties facing the Chinese economy and underestimate the capabilities of China to deepen supply-side structural reform and expand overall demand," the MOF said.