Overseas investors continued to put money into the Chinese bond market in January, but analysts have issued warnings around possible challenges ahead due to US-China policy tensions, reports the South China Morning Post. Inflows have provided a sweet spot for policymakers as foreign holdings of interbank bonds reached RMB 4.07 trillion ($640 billion) at the end of January, which represents around 3.5% of the market total, according to data released by the People’s Bank of China (PBOC) on Monday.
The net increase was RMB 70 billion last month, down from RMB 78.7 billion in December and RMB 80 billion in November.
The new inflows—which amounted to $166.6 billion last year and $186.1 billion in 2020—have been widely viewed as a signal of China’s economic fundamentals and financial depth.