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China's H1 net foreign investment inflow up 45% YOY

Foreign investments flowing into China surged 45% to $294 billion year over year in the first six months of 2018, China Daily reported Oct. 9.

The figure was the highest since 2012, the paper said, citing figures from the State Administration of Foreign Exchange.

Foreign direct investment — when a foreign investor establishes operations or acquires business assets in a country increased by 1.3 times year over year, accounting for 43% of the total inflow.

Net inflow of foreign investment in China's securities markets increased 4.3 times year over year during the period of review, making up 37% of the total inflow, officials said.

Zhang Zhiwei, chief China economist and head of China equity strategy at Deutsche Bank, said the increase in net foreign investment inflows was mainly due to the country's opening up of its bond markets. The net inflow to debt securities increased 7.5 times and accounted for nearly 70% of the net inflow of portfolio investments.

The northbound trading under the mainland-Hong Kong bond connect program that took effect in July 2017 helped streamline procedures for foreign institutional investors to participate in mainland bond markets, Zhang told China Daily.

He estimates overseas investors currently hold only about 2% of China's bond markets.