Global investors pile into Chinese bank bonds
1 min read
Emerging market investors are betting that a bull run in China’s bond markets has further to go, even as Beijing signals increasing discomfort with a soaring rally in government debt.
China’s central bank has been trying to
Ultimately, investors are expecting Chinese banks and other domestic investors to keep having to buy government bonds in place of lending to a slowing economy with few measures on the horizon to lift consumer demand.
Chinese policymakers in particular recently turned down an IMF proposal for a trillion-dollar plan to relieve household losses on property through government purchases of pre-sold unfinished housing stock. A bailout would violate “market-based and rule-of-law principles”, they said.
A drastic course change is also unlikely while official growth targets are still being met, Evans said. “If GDP was growing at 3.5 per cent rather than the 4.5 per cent or 5 per cent at the moment, maybe they would be a bit more alarmed.”
