Group 1 - Foreign institutions are showing a clear medium to long-term strategy in allocating to the Chinese bond market, with a custody balance of 4.3 trillion yuan as of the end of June, accounting for 2.3% of the market [1][4] - The current foreign investment trend has accelerated since the second half of last year, driven by a decline in confidence in dollar assets and an increased preference for non-dollar assets, highlighting the diversification value of the Chinese bond market [3][4] - From 2018 to 2022, foreign holdings of Chinese bonds increased from 200 billion to a peak of 600 billion dollars, and after a slight decline, are expected to rise again starting in the second half of 2024 [4][5] Group 2 - The structure of the Chinese bond market currently shows that interest rate bonds account for approximately 62.3%, while credit bonds account for about 37.7%, with foreign institutions primarily favoring the most liquid interest rate bonds [5][6] - Future preferences of foreign institutions may expand towards credit bonds and asset-backed securities (ABS), as they begin to explore these investment options [5][6] - The Chinese bond market offers multiple advantages for foreign institutions, including large scale, high openness, low correlation, and low volatility, making it an attractive investment destination [6][7]