Concerns about China's sustained strong credit growth appear to be increasing, even as first-half economic growth beat expectations.
China's stock markets were already closed Thursday when the downgrade was published, and there was little reaction from the yuan.
S&P said that recent efforts by the government to reduce corporate leverage could stabilize financial risks in the medium-term.
"However, we foresee that credit growth in the next two to three years will remain at levels that will increase financial risks gradually," S&P said.
S&P also lowered China's short-term rating to A-1 from A-1+.
Diana Kiluta Amoa, emerging market debt portfolio manager at JP Morgan Asset Management told CNBC via email that the downgrade doesn't come as a surprise.
"S&P's downgrade of China's sovereign rating from AA-/negative to A+/stable today does not come as a surprise given Moody's downgrade earlier in the year and only aligns the ratings with the other two rating agencies."
Amoa further explained that any fallout as a result of this decision will be short-lived. Going forward, the outcome from the upcoming party congress and the government's
"Going forward, the outcome from the upcoming party congress and the government's commitments to further reforms will be the bigger drivers for both market sentiment and ratings agencies."