In the wake of the financial crisis, China announced it would set up a reserve currency that would replace the US dollar, whose role it saw as outsized. However, a major turnaround saw China embrace the currency of its rival, Bloomberg writes.

Chinese companies, banks as well as the US government have sold bonds denominated in US dollars at a record pace last year. Moreover, the trend is expected to continue for the upcoming years. Currently assessed at roughly half-trillion is attractive for China’s borrowers for two reasons. While for some it is an easier way to raise money than at home, for others using the US currency is easier to use to fund foreign investments and acquisitions.

As a result, China has a large and growing supply of dollar securities that offer exposure to Chinese companies for investors wary of diving into the country’s increasingly accessible yuan-denominated domestic debt.  The offshore bond market is also set to provide a stake in President Xi Jinping’s Belt and Road initiative (BRI). The project envisions deepening trade and investment ties with countries across Eurasia. Also, bankers see the BRI as a key source of growth in Chinese dollar bonds.

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