According to Apollo, investors worldwide have wanted a secure, stable, and highly profitable investment environment in recent years. Chinese government bonds have become the number one choice. However, alarm bells are now sounding. The Chinese government has adopted some corrective measures, raising concerns among foreign investors about whether this abrupt shift in control could harm investment.
For the time being, favorable inflation-adjusted interest rates and low volatility have persuaded some fund managers to stay optimistic about China’s treasury bonds. The risks posed by the government’s management strategies, on the other hand, are undermining their appeal. As a result, Chinese government bonds cannot compete with U.S. Treasury bonds. In the past, U.S. Treasuries were seen as a global safe-haven asset, which hampered China’s renminbi’s internationalization.
Several studies have found that the Chinese bond market ranks sixth among the world’s top nine bond markets for underwriting safety. The top rank list was occupied by Japanese government bonds, followed by Swiss and Canadian government bonds. China’s national debt normative score was -2.72, the lowest of any bond in the analysis. Furthermore, China’s government bonds have a low credit rating of -1.63.