Finance
China Is Hunting for Foreign Buyers for Its Sovereign Debt
Overseas investors have piled in, but now trade concerns are weighing on demand.
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Spooked by a massive exodus of Chinese capital in 2015, the country’s policymakers hit on a plan to alleviate pressures on their currency. They could attract foreign cash—and boost demand for the yuan—by opening the doors to fixed income investors. Big overseas funds are always looking for ways to diversify and would likely want some exposure to China’s bond market, the third-largest in the world.
Money poured in, and inflows accelerated after China set up a channel called Bond Connect for foreigners to trade through Hong Kong in July 2017. But overseas funds started pulling money out in late 2018.