Beyond the American Dollar: China’s Plan to Replace US Treasuries

Epoch Times ^ | 04/12/2021 | Fan Yu

[SeekAndFind]

Beijing experienced limited success in its quest to overtake the U.S. dollar as the global trade currency. But it may have an easier time convincing the world of its government bonds as an investment alternative to U.S. treasuries.

So far in 2021, Chinese government bonds have far exceeded the performance of their U.S. counterparts.

Since Jan. 1, Chinese government bonds were relatively flat in terms of returns from Jan. 1 through the end of March. In contrast, the Bloomberg Barclays U.S. Treasuries Total Return index fell 4.2 percent during the same period.

Some investment experts think Chinese government bonds could usurp U.S. treasuries as the de facto “haven” asset.

“China’s emergence as a new and credible safe haven destination for bondholders should gradually chip away at the status of the dollar and U.S. Treasuries as the only safe place to hide,” Gustavo Medeiros, deputy head of research at Ashmore Group, recently told Bloomberg. Ashmore is an emerging market investment firm with almost $100 billion in assets under management as of Dec. 31, 2020.

Morgan Stanley also expects foreign investors to continue pouring into China’s government bonds, as “valuations remain attractive vs. other (developed markets) bonds and provide huge diversification benefits for global fixed income portfolios,” Asia Chief Economist Robin Xing wrote in a March 5 note to clients.

The ongoing push from banks and brokers cannot be overlooked.

Last February, J.P. Morgan Chase added Chinese local government bonds into its JPMorgan Government Bond Index—Emerging Markets. In September 2020, FTSE Russell announced it would add Chinese government bonds to its World Government Bond Index. Combined, these two index additions could drive more than $100 billion of inflows from foreign insurers, asset managers, and pension funds into Chinese government bonds.

[delta7]

Do I have to email my Yuan to the Chinese government? Do they email the gold back to me?
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I love the doubting Thomas’s.....keep your eyes on the USD index, AND the CNY index, you just might see the trend.....say it ain’t so China Joe!
Currency converter one year chart.....
https://www.xe.com/currencycharts/?from=CNY&to=USD&view=1Y

[Toddsterpatriot]

I love the doubting Thomas’s....

I know!!!

Why would anyone doubt the Chinese government?