Highlights in the March report

• Despite ongoing uncertainty over trade relations, net foreign inflows into China’s interbank bond market continued growing in Q4 on the back of a stabilizing CNY, as well as attractive yields, considering there’s a significant volume of debt outstanding with sub-zero yields in the global bond market.
• Toward the end of December, policymakers from the central bank published draft rules to govern corporate bond default disposal in order to help the financial system guard against systemic risks.
• Despite default risks, China’s credit growth is expected to hit $13-13.5 trillion CNY in 2020, up from $11.9 trillion CNY in 2019. Local government financing vehicles (LGFVs) are expected to drive new credit issuance in 2020, with LGFV issuance estimated to grow by $3.7 trillion CNY this year.