Foreign Holdings of Bonds on China’s Interbank Market Breach 3 Trillion Yuan Threshold in November

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Official data indicates that foreign institutional investors lifted their bond holdings on the Chinese interbank market to a new record high last month.

Figures released by the Chinese central bank on 3 December indicate that as of the end of November 2020 offshore institutions held 3.1 trillion yuan (approx. USD$458.66 billion) in bonds on the interbank market.

Over the past six years foreign institutions have seen their holdings of Chinese debt increase by more than six-fold, to first breach the trillion yuan threshold in September 2017, before surpassing 2 trillion yuan in July 2019 and 3 trillion yuan in November 2020.

Their market share has risen to over 3%, making them the third most influential investor group after commercial banks and broadly defined funds.

Foreign institutional investors are also responsible for the purchase of around 10% of outstanding Chinese government bonds, holding 1.79 trillion as of the end of November. Chinese government bonds, policy-based finance bonds and interbank certificates of deposit account for 93% of their interbank market holdings.

As of the end of November 893 offshore institutions had entered the Chinese interbank bond market, for an increase of 17 that month.

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