Asia FX and Rates Strategy: China Chart Pack

Research evidence excerpt

Asia FX and Rates Strategy: China Chart Pack

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23 Jul 2026 22:57:35 ET │ 43 pages

Asia FX and Rates Strategy

China Chart Pack

CITI'S TAKE

Rohit Garg AC

China’s macro backdrop remains broadly stable, with external resilience +65-6657-3471

supported by a solid trade performance and a notable rebound in inbound rohit.garg@citi.com

FDI, aided by targeted policy support for strategic sectors. RMB strength is

likely to remain underpinned by ongoing RMB internationalization efforts, With thanks to

steady onshore CNY demand, and calibrated policy fixings. On the liquidity Stanley Ren

front, PBoC has maintained an accommodative stance, albeit with more

granular and targeted management. Fiscal deployment has been relatively

constrained in 1H, but is expected to accelerate in 2H alongside faster CGB

issuance. We believe that there is room for 10y CGB yield to gyrate towards

1.60% given the lack of credit growth as well as continued support from

PBoC’s bond purchases.

Key takeaways from this chart pack are:

– External resiliency: despite softer-than-expected nominal growth in 2Q, C/A

strength remains intact supported by robust export outperformance particularly

in AI-related hardware segments.

– Rebound in direct investment inflows: FDI into China has picked up notably,

driven by improved foreign investor sentiment amid incremental opening

measures and targeted policy support in strategic sectors.

– Subdued credit dynamics: Aggregate credit conditions remain weak, and

threshold for any meaningful re-acceleration in credit growth appears elevated in

near term.

– Stable portfolio flows: Cross-border portfolio flows have remained broadly

stable, foreign investors re-engaged in CGB exposure in May and June.