China Bond Report - May 2021

In this paper, we assess the impact following the recent announcement that Chinese government bonds will join the FTSE Russell World government bond index, or WGBI, over a period of 36 months from October 2021—we consider both private sector and official holdings.

Given that foreign holdings of Chinese government bonds have been low historically, there is the potential for them to rise significantly. These increased holdings could amount to US$130-160 billion to match China’s inclusion in the WGBI alone, and a further US$207 billion in central bank inflows, assuming private investors seek to move to benchmark index weight, and central banks closer to the renminbi’s special drawing rights weight over time.

You can now read the full report at the link below