China bond move brings risk as well as reward for Beijing

Country needs more financial reforms to see full benefits of index inclusion

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20190403 Zhejiang bonds.jpg

Waves of fresh capital are sure to rush China's way. © FeatureChina/AP

Foreign investors already hold a not insignificant chunk of mainland Chinese bonds -- around $223 billion. But this total will be dwarfed by the new inflows that are almost certain to follow the inclusion, for the first time, of yuan bonds in a global index.

Given the big role of index bonds in world markets, the move will likely send hundreds of billions of dollars into Chinese bonds from investors who have so far not had the mainland in their portfolios.

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