China's ongoing economic growth, which had a 6.5% surge in Q4 (1), coupled with an earlier and less drastic rise in bond yields than seen in the US, has contributed to China earning the status of leading global economic indicator, and is setting up its bond market as a safe haven for investors looking for diversification amidst the growing uncertainty surrounding western economies and markets (2). China's ongoing appeal has created a flood of incoming dollars as foreign buyers put their money into Chinese bonds and Chinese goods, with a moderate balancing outflow related to the stock connect programme.
Despite China having greatly reduced its dollar usage in hopes of not only eliminating its dollar dependency but as a move to overthrow the US as an economic power, global use of the yuan, at 2.4%, remains well below the dollar's 38% (3). In an effort to slow the yuan's recent appreciation, Chinese authorities are further easing restrictions on outflow via overseas investing (4).
Despite recent Sino-Indian tensions, trade between China and India is absolutely peachy. India relies heavily on Chinese goods, notably industrial tools, and home and lifestyle equipment. Imports into India from China surpassed that of the US and UAE combined. Exports from India into China, namely metals, saw an increase with a massive leap of over 2000% in aluminum (5).