Here's our full report on China's rating downgrade by Szu Ping Chan:

China's credit rating has been downgraded for the first time in almost three decades by Moody's, as the rating agency warned the country's massive debt pile would keep on rising despite a series of ambitious reforms.

Moody's said the world's second largest economy was likely to see a "material" rise in debt in the coming years as policymakers stimulate the economy to prevent a sudden slowdown.

It downgraded China's rating by one notch to A1, from Aa3 , keeping it within investment grade territory.

Market reaction to the downgrade - the first since 1989 - was muted, and came as China's finance ministry said Moody's assessment of the Chinese economy underestimated its ability to enact reforms.

In a statement, Moody's said it expected the country's financial strength to "erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows".

It said: "While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt", as well as potential future costs.

China's three challenges

Moody's said China's ageing population, a slowdown in productivity growth and state-led investment were likely to weigh on output in the medium term, which was likely to slow to close to 5pc over the next five years, from 6.7pc in 2016.

It said maintaining robust levels of growth would require more fiscal stimulus as the economy attempts to shift towards growth led by consumer spending.

It warned that a series of reforms designed to guide China's transition "would not fully offset the rise in economic and financial risk".