China’s domestic bonds, denominated in renminbi, have been popular with international investors this year. But changes in key market conditions, including an upsurge in corporate defaults and the renminbi’s slide against the US dollar, raise questions over the sustainability of inflows.

The vogue for renminbi bonds has taken off this year mainly because of the prospect of their inclusion in global benchmark bond indices, obliging investors who track such indices to load up on up to $245bn in domestic China debt in coming years, according to ANZ Research.

So far, the Bloomberg-Barclays Global Aggregate Index has said it will add some categories of Chinese bonds starting in April 2019, while the Citi WGBI and the JPMorgan GBI-EM indices are widely expected to follow suit later.