Head of the Bank of China (BOC) Paris branch Pan Nuo (2nd L) and Chinese Ambassador to France Zhai Jun (3rd L) ring the bell of the listing of RMB-denominated climate bond in Paris, France, Nov. 28, 2017. (Xinhua/Han Bing)
BEIJING, April 25 (Xinhua) -- China bonds have relatively strong value for investors as compared to others on a global scale, reported Xinhua Finance citing Wang Chunying, spokesperson and deputy head with the State Administration of Foreign Exchange (SAFE) on April 22.
Wang made the remarks on a press conference on quarterly foreign exchange receipts and payment data held on April 22, saying that in the history of China's bond market opening, yield spread has not been the only factor or even the dominant factor affecting foreign investment in China bonds.
In 2018, the yield spreads between Chinese treasury bonds and comparable U.S. government bonds also once narrowed down to historical lows, but the then bond investment-related capital flows generally resulted in net capital influx and bore no significant shocks from the narrowed spread, held Wang.
From the perspective of portfolio investment, China's relatively strong macro policy autonomy and unsynchronized economy and policy cycles with major developed economies such as the United States are helpful for Renminbi (RMB)-denominated assets to become an important major asset class with independent market performance, noted Wang.
During 2019 and 2021, the indicator reflecting the correlation between Chinese treasury bond indexes and the U.S. government bond indexes stayed at around 0.2, hinting barely any link between them, and under such circumstances, RMB-denominated Chinese treasury bonds offered global investors preferable value for their portfolio investment.
Currently, foreign nations generally choose to diversify their investment when reserves adequacy and liquidity conditions allow in operation and management of their reserve assets. Wang said that demand for RMB-denominated bonds by foreign central banks expanded continuously and they have always been the main contributors to add holdings of domestic RMB-denominated bonds.
By the end of March, foreign central banks' investment in China bonds took up 58 percent of the overall foreign holdings of China bonds, according to SAFE data. What's more, RMB entered the SDR basket of IMF with a weighting of 10.92 percent and its share in global foreign exchange reserves stood at 2.79 percent in the last quarter of 2021, indicating room for further increase.
In future, SAFE will adhere to the reform and opening up and maintain the consistency and stability of foreign exchange management policies to facilitate foreign investment in China's securities market, according Wang.
Over the long run, China's financial market will continue to open up and global investors need China assets. The trend for foreign investors to invest in China's bond market in the long term will not change, Wang added. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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