Foreign investors snap up Chinese debt as yields rise

Foreign investors are increasing purchases of Chinese interbank debt as rising mainland yields and favourable currency conversion rates make the market attractive. Holdings of negotiable certificates of deposit (NCDs) hit a record CNY1.14tr (USD158bn) at February’s end, marking the third straight month of buying. The yield on one-year NCDs has risen 40 basis points to 2%, while dollar investors can earn 4.8% with hedging—higher than the 4% return on US Treasuries. The shift signals renewed capital inflows into China, supporting the yuan amid ongoing Sino-US trade tensions. Investors are drawn to China’s low correlation with global markets and potential US rate cuts, analysts said.