Chinese government bonds have been included in a leading international index of government bonds amidst ongoing efforts to internationalise access t China’s debt market.
On 29 October FTSE Russell added Chinese government bonds to its World Government Bond Index (WGBI), following concerted efforts by China to increase access to onshore debt for foreign investors.
HSBC estimates that the move will lead to passive inflows into Chinese government bonds worth USD$140 billion – 150 billion over an inclusion process that will extend for a 36 month period.
As of the end of September international investors held approximately 3.9 trillion yuan in Chinese government bonds.
The People’s Bank of China (PBOC) said that the move from FTSE Russell “fully reflects the confidence that international investors have in the long-term sound development of China’s economy and in China’s commitment to further opening up its financial markets.”
PBOC said that it would “continue to work with all parties concerned to improve relevant policies and institutional arrangements, consolidate and expand mechanisms for two-way cross-border investment and financing, and provide a more friendly and convenient environment for domestic and overseas investors.”