Fears for human rights leads to collapse in investment in Chinese bonds
They went from 2.1 billion to 260 million euros between February and March. US and European investors fear for their holdings. The drop is mitigated by the growth in production. Beijing now has fewer resources to stimulate recovery from the pandemic crisis.
Beijing (AsiaNews / Agencies) - The concerns of foreign investors over human rights violations and the lack of transparency in China’s financial system have led to a collapse in investment in Chinese government bonds. The Asian Giant’s public bodies and companies only posted bonds worth 2 billion yuan (300 million euros) in March: in February they had reached 16.5 billion yuan (2 billion euros).
International pressure, especially from the United States and the European Union, has prompted foreign investors to give greater weight to humanitarian issues such as the repression of Uyghurs in Xinjiang and Hong Kong’s democracy movement. European and US funds fear that China's environmental, social and governance problems could jeopardize their investments.
The negative trend on Chinese bonds is mitigated by the growth in investment in production. According to the National Statistics Office, they grew by 43.8% in the first quarter of 2021 in one year: between January and March 10,263 new foreign-invested companies were established in China.
The lower inflow of financial investments risks slowing the country's economic recovery from the pandemic crisis. Beijing's recovery was based on a massive deficit-financed public aid and investment plan, an option that conflated the national debt. The forecasts are for a gradual withdrawal of economic and financial stimuli in the coming months.
Official statistics say that in the January-March period the national GDP grew by 18.3% compared to the same period in 2020. Observers point out, however, that the data is "distorted" by the low levels of a year ago, caused by the first wave of Covid-19. In this sense, the result compared to the last quarter of last year is more indicative, with the Chinese economy growing by only 0.6%.