Moody's Investors Service on Tuesday affirmed China's government's bond rating of Aa3 but cut the outlook to stable from positive, citing concerns over excessive local government borrowing.

"Progress has been less than anticipated in the process of both reducing latent risks by making local government contingent liabilities more transparent and in reining in rapid credit growth.

"Therefore, some of the upward pressure on the Aa3 rating has eased," Moody's said in a report explaining its move.

The move came after Fitch Ratings last week cut China's long-term local currency credit rating to A+ from AA-, referring to the same issue in justifying its negative revision.

Moody's said it affirmed the Aa3 rating because of China's credit fundamentals, which have been underpinned by continued robust economic growth, strong central government finances and an exceptionally strong external payments position.

"More reform would be necessary to prevent a buildup of pressures that could increase the risks of a hard landing for the Chinese economy," the report said.