by Dramelin 1:00 AM 0 comments

But Goldman noted that even the $250 billion in potential inflows from index inclusions wouldn`t fully solve the issues with net outflows.
"In practice, if China`s bond market is fully liberalized, then it should attract other inflows such as foreign banks` balance sheet desks and trading desk flows.
China has labored under continuous outflows the past couple years, but reforming its bond market could reverse the current, Goldman Sachs said in a note on Wednesday.
But Goldman said China could stem the net outflow through its bond market, as while it`s the third-largest government bond market globally, with $1.
7 trillion of value outstanding, it isn`t included in any major global bond index because of the country`s capital controls.
In 2016, China`s reserves fell by $320 billion, after dropping $513 billion in 2015, it said.