Fitch Ratings downgrades China’s long-term IDR

Fitch Ratings Tuesday downgraded the China's long-term local currency Issuer Default Rating (IDR) to 'A+' from 'AA-'.

Fitch noted that China's investment-led growth model faces tightening constraints as the share of investment in GDP approaches the level of domestic savings.

"The process of rebalancing the economy toward consumption could lead to the economy's performance becoming more volatile," Fitch said.

Risks over China's financial stability have grown, said Fitch.

The rating agency believed that total credit in the economy including various forms of "shadow banking" activity may have reached 198 percent of GDP at end-2012, up from 125 percent at end-2008.

Only 55 percent of new social financing took the form of bank lending in the 12 months to February 2013, down from 76 percent in 2009, according to Fitch.

"The proliferation of other forms of credit beyond bank lending is a source of growing risk from a financial stability perspective," Fitch noted.