Some US$140 billion ($192 billion) may flow into China’s onshore bond market after the index provider FTSE Russell added debt issued by the Chinese government to one of its widely-followed benchmarks, according to recent research.
FTSE Russell announced these changes to its World Government Bond Index (WGBI) on Sept 25. Inclusion of Chinese government bonds (CGBs) will start next year, subject to final confirmation. The move brings the company in step with the compilers of the Bloomberg Barclays Global Aggregate Index, and the JP Morgan Government Bond Index — Emerging Markets.
More international investment in China seems counterintuitive in these troubled times of mounting US-China rivalry. This is a strategic rivalry that will lead to further decoupling for the world’s two largest economies, raising hurdles to trade and investment.
