How will further loosening of monetary policy affect China's government bond market?

Cary Yeung, head of greater China debt at Pictet Asset Management, analyses what the recent turmoil in Chinese markets means for the onshore bond sector

Beijing's decision to devalue the renminbi should be seen as a step forward for China's market reform efforts. The belief that the move was a competitive devaluation to boost the country's exports sits at odds with the facts. China's net exports account for 0.3% of annual growth, which is currently running at about 7%. That is dwarfed by the contribution made by either consumption (4%) or investment (2.5%). What is more, China will be well aware of the experiences of other countries in the region, which suggest currency weakness no longer guarantees higher exports. Although Asian c...