
China Is Hunting for Foreign Buyers for Its Sovereign Debt - spking
https://www.bloombergquint.com/businessweek/china-is-hunting-for-foreign-buyers-for-its-sovereign-debt#gs.ZQU1vFGV
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cm2187
Can someone explain to me why an investor would want to invest in a foreign
debt and currency from a country that has capital controls and a history of
undervaluing its currency?

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microdrum
Interesting line re: this from last year's moviee Crazy Rich Asians:

"There is a Hokkien phrase, 'Gar gee nang.' It means, our own kind of people.
And you're not our own kind."

"Because I'm not rich? 'Cause I didn't go to a British boarding school, or I
wasn't born into a wealthy family?"

"You're a foreigner. American. And all Americans think about is their own
happiness.

"Don't you want Nick to be happy?"

"It's an illusion. We understand how to build things that last. Something you
know nothing about."

Funny thing is that I feel like it is indeed rare for cultures-countries to
think about building things that last. But the US is actually one of the few
countries that does---whereas China can't float this level of debt at
attractive rates because it is NOT long term focused. It keeps doing insane,
credibility-destroying things. Yet always talks about how it is a long term
actor.

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jhwang5
Way to get cultural insights into China from a Hollywood movie bro

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krapp
To be fair, it's a Hollywood movie based on a book written by a Chinese author
based on his childhood in Singapore. So not entirely without legitimate
cultural insight.

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jhwang5
It's written for the western audience. And I think you just made my point for
me. At best it reflects the rich Chinese people's attitude - since when is HN
rampant with small sample generalizations?

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krapp
> since when is HN rampant with small sample generalizations?

Since always. I can't count the number of generalizations I've seen which
begin with "in my experience," for which the poster's experience likely
includes a sample of one at least, or half a dozen at most.

And to be perfectly fair, it seems to happen a lot when China or Japan come
up.

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jhwang5
>And to be perfectly fair, it seems to happen a lot when China or Japan come
up.

Right, I wonder why.

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wonderwonder
I wonder if China is seeing any impediments due to people being loathe to
invest in a country where personal freedoms are very restricted and millions
of their citizens are swept up in re-education camps. I would be hesitant from
a personal standpoint but most larger wealth funds are probably not so
restricted. By the same token neither are most manufacturers.

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unioncalia
Not only can you not move money out of China if you have some invested there,
you can't even leave! => The US government is warning Americans that if they
visit China they may not be able to return home
[https://www.businessinsider.com/us-china-travel-
advisory-201...](https://www.businessinsider.com/us-china-travel-
advisory-2019-1?r=UK&IR=T)

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dcposch
> The new China travel advisory is a level two advisory which urges increased
> caution.

> Other countries or regions with a level two advisory include Algeria, Burma,
> Antarctica, Belgium, France, Germany, Denmark, and the United Kingdom.

Sounds not particularly serious. Also lol at Antarctica

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oyashirochama
Any travel advisory is pretty serious since it implies a risk, that itself
will cause diplomatic issues due to tourism loss.

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networkimprov
China's leaders have historically shied away from this policy, so as to
protect itself from the whims of foreign investors, and maintain maximum
control over its economy. This reversal may point to a crisis beneath the
surface, as it's probably not their preferred path...

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cm2187
If the debt is in yuan and under chinese law, foreign investors don't have
much say on their economy.

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seppin
if they stop buying once they start, they certainly do

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beatgammit
Like they did...

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fratlas
What would the risk analysis look like for sovereign debt?

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hermitdev
I'm not sure exactly what you're asking, but there are probably an untold
number of factors when analyzing risk on sovereign debt. Probably amongst the
forefront would be history of payment on bonds, currency stability, GDP, tax
collection, and government stability.

For instance, I wouldnt buy an Argentine bond - they've failed to make bond
payments to such an extent they had a warship seized as collateral in a
foreign port. Likewise, Greece has had trouble making payments. GDP is poor,
and tax evasion rates are high. To boot, because Greece is on the Euro, it
cant even devalue its currency to lessen its debt burden.

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kmonsen
This is why there are different rates for bonds, if you only want the safe
ones the return will be small as well.

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hermitdev
Of course, this is not in question. It is very typical that bond yields are
inversely correlated with risk. Higher the rating, lower yield. Lower rating,
higher yield, but increased risk of default.

