The main reason why foreign investors favor Chinese bonds is that Chinese bonds can bring higher returns. In the third quarter, foreign institutional investors purchased a net 321.1 billion yuan of bonds in my country's inter-bank bond market. Since the net purchases in the first half of the year were about 500 billion yuan, the net purchases in the first three quarters exceeded 800 billion yuan. In September, foreign institutional investors bought a net 110.8 billion yuan in my country's inter-bank bond market, a 59% month-on-month increase, and exceeded 100 billion yuan again after July.

Many foreign investors are now buying Chinese bonds, mainly for income. Although foreign capital continues to flow in, there is still a lot of room in terms of amount and proportion. This can be said to be a win-win situation for our country and foreign countries. In a recent interview with the media, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said that our current financial sector is not open enough, and the capital market is not open enough. The total market value of A-shares held by foreign investors now accounts for about 2% of the total market value of A-shares, so we need to increase openness. Foreign capital can obtain some income through Chinese bonds, and China can also enrich its stock market. Selling more bonds is beneficial to China.

China will also encourage foreign investors to purchase Chinese bonds. Treasury yields fluctuate due to changes in supply and demand. If there is more money to buy government bonds, bond prices will rise and yields will fall, and vice versa. When treasury bonds are freely traded in the market, different maturities and their corresponding different yields form the "benchmark interest rate curve" of the bond market, which provides guidance for other securities such as bonds, stocks, futures, and options, as well as commercial loans from commercial banks. , insurance companies' insurance contracts and other market-based pricing provide a reference basis.

When a large amount of foreign capital purchases Chinese government bonds, yields fall, which is passed on to other assets. For individuals and businesses, the most direct benefit is the reduction of financing costs.