Moody's Investors Service lowered its outlook for China's credit rating to stable from positive, saying the nation has made less progress than anticipated in reducing risks from local government debt and credit expansion.

"Structural reforms" under the new leadership may not be sufficient over the next 12 to 18 months to justify an upgrade, Moody's said on Tuesday as it affirmed China's Aa3 rating, the fourth-highest level.

Moody's also cut the outlook on Hong Kong's Aa1 rating to stable.