In a significant show of confidence in China’s economy, overseas investors increased their holdings of Chinese domestic bonds by $41.6 billion in the first quarter of 2024, according to official data released on Thursday. This surge marks a substantial rise compared to the total net increase of $23 billion recorded throughout 2023.
Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, highlighted the trend during a press conference, stating, “Recently, overseas institutions’ investment in domestic bonds has increased significantly.”
By the end of March, over 1,100 overseas institutions from more than 70 countries and regions had entered China’s domestic bond market. Their combined holdings exceeded $570 billion, representing approximately 2.6 percent of the total domestic bonds in custody—an increase of 0.2 percentage points from the end of last year.
The investments have been particularly focused on medium- to long-term bonds, such as treasury bonds, with overseas central banks and financial institutions leading the way. This shift suggests a growing confidence in China’s long-term economic stability and the potential for sustained returns.
Looking ahead, Wang expressed optimism about the continued inflow of overseas capital into China’s bond market. She attributed this positive outlook to a sound macroeconomic environment, a stable renminbi exchange rate, and the increasing use of the renminbi in global cross-border transactions. “We expect overseas institutions’ investment in domestic bonds to sustain a steady growth momentum,” Wang said.
The surge in overseas investment underscores China’s expanding role in the global financial landscape. For global investors, the Chinese bond market offers diversification opportunities and attractive yields amid a backdrop of global economic uncertainty.
Reference(s):
Foreign holdings of Chinese bonds see net increase of over $40 bln
cgtn.com
