> How would they rate China? I keep hearing that their banks are heavily
> exposed to a leveraged real estate boom.
Officially, they give China an AA rating, better than the US. Of course, this exaggerates the US decline a bit, but in fairness to Daqong, the ratings universe they're covering is very different – mostly China's blue-chip firms and the largest state enterprises. Given that this is the most competitive, best-managed slice of the Chinese economy, an AA rating is reasonable (the comparable rating for the most competitive slice of the US economy would be AAA, of course).
Yeah, the goldbugs keep muttering about a China bubble, but I don't see the evidence. They have no derivatives or toxic CDOs in their system, requirements for getting mortgages are still pretty strict, the banks are state-owned, and the country is urbanizing fast -- hundreds of millions of people want to move to the cities. The gloomsters point to unfunded local liabilities, but even the most pessimistic analysis says China only has around $3 trillion in domestic debt and $400 billion in external debt -- peanuts compared to China's $2.7 trillion in reserves. There's plenty of froth and low-level corruption, sure – probably half of China still lives at a subsistence level, municipalities make the occasional terrible investment – but China's growth is as real as those bullet trains zipping around the place.
-- DRR