Offshore investments in Chinese govt bonds slowed in 2021

Offshore holdings of Chinese government bonds (CGBs) reached new highs in 2021, although at a slower rate as the yield premiums on Chinese bonds were eaten away by differing monetary policies between China and the US.

According to data issued Monday evening by China Central Depository and Clearing Co (CCDC), the principal depository institution for China’s interbank bond market, CGB holdings by overseas investors reached a new high of 2.45 trillion yuan (US$384.51 billion) at the end of December.

According to Reuters calculations, that was up 30.7 per cent from a year ago, slower than the 43.7 per cent increase predicted in 2020.

China’s policy banks’ holdings of quasi-sovereign bonds increased 1% month on month to a new high of 1.08 trillion yuan. This was up 18% from the previous year, compared to an 84.44% increase in 2020.