(Yicai Global) April 15 -- Chinese physical and financial assets are very attractive to investors, according to a China Banking and Insurance Regulatory Commission official, who insisted that investing in the country is to invest in the future, and investing in the future must be inseparable from China.

The interest rate spread will narrow in the short term as the US Federal Reserve has started to raise rates, making US assets more attractive to investors, Ye Yanfei, head of the CBIRC’s policy research bureau, told a press conference in Beijing today.

But the US national debt now has an inverted yield curve, and the longer-term yields are lower than short-term returns, creating doubts about the US economy’s long-term expectations and whether the yields can be maintained in the long run, he said.

Chinese assets are more appealing in terms of real interest rates, Ye said, adding that the Chinese economy has great potential.

China’s gross domestic product per capita exceeded USD12,000 last year, just reaching the threshold of middle- and high-income countries and there is lot of room to grow, creating much opportunity for companies, he said.

Chinese assets will grow with the country’s economy, and the per capita income will also increase and become more attractive to investors, Ye noted.

The purchasing power parity of the Chinese yuan versus the US dollar is much lower than the nominal interest rate-affected exchange rate. Looking at the history of Germany and Japan, their currencies appreciated because they had to return to their PPP level. In the long run, yuan-denominated assets will become more appealing, Ye said.

The ratio of China’s sovereign debt to gross domestic product is low, and its sovereign credit is very stable, which is also very alluring to overseas investors, he said.

Editor: Peter Thomas