January 2023: Internationalising like China

By Christopher Clayton, Amanda Dos Santos, Matteo Maggiori, and Jesse Schreger

China’s strategy for internationalising the renminbi involves controlling the access of foreign investors to the domestic bond market. This column argues China’s policy involves a trade-off between building a reputation as a country capable of providing a global store of value and risking disruptive foreign capital flight. Using micro data on foreign investors’ portfolios, the authors show that investors perceive China’s reputation as a borrower to be between that of an emerging and a developed market.

Link: Internationalising like China