Foreign purchases of onshore Chinese bonds more than doubled in May, suggesting the world’s second-largest economy with its relatively high yields is becoming a magnet for hot money, reported the South China Morning Post.
According to figures released by the State Administration of Foreign Exchange on Friday, net purchases of bonds by foreign funds rose by 104% from April to $19.4 billion. Meanwhile, Chinese banks reported a 61% increase in foreign exchange trading to $23.8 billion, the agency said, suggesting a growing willingness among Chinese individuals and companies to convert US dollars into RMB.
The figures confirmed the trend of strong capital inflows seen in data from other institutions. The latest figures from the Shanghai Clearing House, which records onshore bond positions, show that foreign ownership of China’s onshore bonds has risen to a record high.
The outstanding positions of onshore Chinese bonds owned by non-mainland investors amounted to RMB 2.43 trillion ($343.4 billion) at the end of May, or 2.6% of the total – its highest recorded proportion.