What bond markets tell about China’s economy

Alicia García Herrero and Gary Ng There is no doubt that Chinese macro data has some drawbacks and needs to be complemented. One great source of information is China’s increasingly large and liquid bond markets, both onshore and offshore. Here are some takeaways on China’s economic activity, private credit and capital flows. On economic activity, first, the massive increase in onshore bond issuance is a very good signal of how much credit is flowing into the economy as a consequence of the government push for stimulus. The irony, though, is that it is mainly the public sector, either state-owned companies (SOEs), local governments or their financial vehicles (LGFVs) instead of private firms, which are issuing debt. This might be explained […]

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