The Chinese government has criticised international ratings agency Moody's, saying its first ratings downgrade in 30 years was based on "inappropriate methods" of pro cyclical rating.

The blunt Moody's report said the Chinese economy's financial strength will erode in coming years as growth slows and debt rises.

The Chinese government has argued its debt risk index would be little changed by 2020. Credit:Alamy

In a statement released in the wake of the shock ratings downgrade, from Aa3 to A1, the Chinese finance ministry defended the Chinese economy and said the first quarter of the year had seen steady growth with better-than-expected economic indicators.

A spokesman for the Ministry of Finance said Moody's report "overestimated the difficulties faced by China's economy, and underestimated the Chinese government's capability to deepen the supply side structural reform and moderate expansion of gross demand".