The Silk Road Journal by Mahika Ming

According to Chinese trade sources the Peoples Republic of China (PRC) was ranked second largest foreign capital inflow destination in the world by the United Nations Conference on Trade and Development (UNCTAD) in 2021.   Recording a yearly increase of 32%, China has attracted more than USD 334 billion in 2021. This inflow according to analysts demonstrates the attracting power of the Chinese economic management skills. With more foreign investments coming in, total increase in liabilities also has increased to more than USD 662 billion in 2021 which actually is a result of increased foreign direct investment and foreign investment in RMB assets (Ref SAFE).  International investments in Chinese securities have rose by approx. USD 177 billion and the investment in derivatives had reduced by approx. USD 7 billion. According to SAFE, the total yield of inbound investment in China was approx. 6% in 2021 and the yield of China's investment outbound was approx. 3%.

The PRC which studied Sri Lankan economic policies and acts before opening its economy has come a long way. Sri Lankans should ask themselves what went wrong at home. Why would an investor go to a particular destination? China came with a billion USD to build the port city and we suspended it half way. However, after realizing the gravity (may be reading it in the news papers), those responsible invited other investors flagging the Port City as the show piece.  According to experts, many foreign investors prefer Chinese bonds when it comes to securities investment. Due to the stability China maintains through its political and social administration backed by the strength of the Peoples Liberation Army, Chinese government bonds are being included in the FTSE Russell World Bond Index among the favoring factors to investors. Also as per SAFE, JPMorgan Chase Global Emerging Market Government Bond Index and the Bloomberg Barclays Global Aggregate Bond Index have successively included Chinese bonds in 2020 and 2019. China deepening the reforms and widening the opening-up in foreign exchange policies will stabilize its macro-economy and fortify the balance of payments in 2022 according to SAFE.

Sri Lankans should be educated on how city of Sheng Zheng operates if they want to attract investments. Quite a few in Sri Lanka would do anything to attain Nirvana and float like a feather. That’s a noble attempt indeed but there is a larger population suffering due to economic mismanagement and the floating of the rupee. If those suffering can be rescued, that will in turn help attain Nirvana!

The writer is an analyst with interests in the financial and sustainable development sectors with postgraduate exposure in the Far East (mahika.ming@gmail.com).