Moody's Investors Service has put a negative outlook on China's debt, citing expectations of a regional government bailout. The ratings agency cut its outlook on China's debt from stable to negative, while keeping the long-term rating at A1. Moody's expects the national government to step in and financially support financially-stressed regional and local governments and state-owned enterprises, which poses risks to China's fiscal, economic, and institutional strength. The property troubles in China have led to a loss of land sale revenue for regional and local governments, and Moody's estimates that one-third of state-owned enterprises debt has weak debt sustainability. This debt crisis in China's property sector has led to the downgrading of China's credit rating outlook.

China's property sector, which accounts for a quarter of GDP, is facing a deep debt crisis, with some major developers owing hundreds of billions of dollars. The government's response to Moody's downgrade was disappointment, as they believe China's economy has been recovering despite global economic challenges. However, weak consumer and business confidence, a persistent housing crisis, record youth unemployment, and a global slowdown have all contributed to China's economic struggles. While there have been recent signs of growth with third-quarter GDP coming in higher than expected, concerns about China's debt crisis and its impact on the economy remain.