China investment: a new age of open access

China also saw large investments in its government bonds in 2018, and the expected full inclusion of Chinese bonds into global bond indices is predicted to attract flows worth USD286 billion, with foreign ownership of onshore bonds set to rise to as much as 7 per cent by end-2020, from under 2 per cent in early 2018.

These developments are essential for China, given the competition from other developing jurisdictions for foreign investors' cash. Of course, for China, domestic considerations remain the primary drivers and will dictate the pace of further liberalisation. To that end, following the addition of the RMB to the IMF's Special Drawing Right basket, Beijing has set its sights on making the yuan a global reserve currency.

However, to achieve this, China needs a transparent monetary policy and currency management system, and sizeable domestic capital market that's easily accessible to overseas investors. Recognising the work to be done in this regard, the CSRC is promoting local capital markets while the People's Bank of China is reforming the interbank market and facilitating RMB-denominated debt.

As China works to enhance market participation, and gain wider acceptance and recognition on major world indexes, it is well placed to secure for its markets and currency a position more in line with its status as the world's second-largest economy. This makes it possible to envision a scenario in which overseas investors will enjoy the same accesses and rights as their domestic counterparts, even if the path to such a scenario will be gradual.