(Yicai Global) July 21 -- Overseas investors will keep increasing their holdings of Chinese yuan-denominated assets, the deputy administrator of the State Administration of Foreign Exchange said today.

Offshore investors made a net buy of USD79 billion worth of onshore bonds in the first half, reversing the net sales recorded last year, Wang Chunying said at a press briefing. USD58.5 billion of this was purchased in the second quarter, a high quarterly level.

And they have been increasing their holdings of onshore bonds for two straight months, with a USD11 billion jump in June from May, she said.

Foreign currency investments in China's bond market are growing even though the global cross-border bond market has been slow all year, she said, The main international institutional investors are overseas central banks but other types of foreign financial institutes are also quite active.

In terms of the international balance of payments, China’s current account was in surplus while the capital account was in deficit in the first quarter, Wang said. But combined offshore investments have returned to net inflow. The flow of cross-border assets remained relatively stable in the first half, with supply and demand basically balanced on the foreign exchange market.

China’s inter-bank bond market has become a key target of offshore investors' global investment portfolios, Wang said. As of the end of June, over 1,100 institutions from more than 60 countries were taking part and their total turnover tallied over USD2 trillion, more than nine-fold that in 2016.

Offshore investors are also expanding their investment targets. Apart from government bonds and policy financial bonds, they have started to invest in China's short-term financing bills, medium-term notes and other kinds of debt as well as asset-backed securities.

China will continue to open up the bond market and promote innovative products and services, Wang said.

Editors: Shi Yi, Kim Taylor