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Foreign Bond Investors Start Seeing China Like Developed Market

  • Chinese bonds viewed as more akin to developed market debt
  • Official response to outflows a crucial test, new paper says

China’s gradual approach to opening its bond market led some foreign investors to start viewing Chinese bonds as more akin to debt from developed nations rather than emerging markets, but the continuation of that reputation depends on how Beijing handles this year’s record sell-off by foreigners.

That’s according to the economists behind a new research paper “Internationalizing Like China,” published this month by the National Bureau of Economic Research in the US. The authors carried out a detailed analysis of the foreign ownership of Chinese bonds, which reached nearly $640 billion at the start of 2022.