The stable rating outlook on China Development Bank (CDB) is in line with the outlook on the sovereign credit rating on China (A+/Stable/A-1). Given the bank's integral link with the government, and its critical policy role, future rating transitions will continue to move in tandem with the sovereign. We could lower the ratings on CDB if we downgrade China. This could happen if we see a substantial weakening in fiscal discipline, such that China's fiscal deficit remains much larger than 3% of GDP over the next three years. We could also lower the sovereign ratings if contingent liabilities crystallize on the balance sheets of the local governments, resulting in a sharp rise in general government debt. We could also lower
