Illustration: Eniola Odetunde/Axios

The amount of foreign money flowing into onshore Chinese bonds more than doubled in May from its previous monthly total and the proportion of the bonds held by foreign investors rose to the highest level on record, Chinese government data showed.

What's happening: Ultra-low bond yields in the U.S., eurozone and other developed markets seem to be driving money to China, even as its yuan currency depreciates below 7-to-1 against the dollar.

  • The increase from April to May was the largest in 18 months, South China Morning Post reported.
  • “Overseas investors are showing great interest in the Chinese bond market because its sovereign treasury bonds have relatively strong returns,” Robin Xing, Morgan Stanley’s chief China economist, told SCMP.

Yes, but: The numbers are still very small. The outstanding positions of onshore Chinese bonds owned by non-mainland investors was only $343.4 billion at the end of May, or 2.6% of the total.

Of note: In April, data showed foreign investors holdings of U.S. Treasury bonds fell to its lowest level since December, while foreign holdings of U.S. corporate bonds rose to the highest since September, another sign investors are willing to trade safety for yield.

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