BEIJING -- Overseas holdings of bonds traded in China's interbank market reached a new high at the end of December, as global investors were lured by relatively high yields and stability, certainty and growth of the world's second-largest economy in the pandemic era.

Outstanding overseas institutional holdings of interbank bonds rose to a total of 4 trillion yuan ($628.1 billion) at the end of last year, according to data from the People's Bank of China.

"China is leading the world in the fight against COVID-19, and its early recovery has brought stronger fundamental resilience," said Gao Ting, head of research and chief strategist at Nomura Orient International Securities.

The solid performance of the Chinese economy and the smooth progress of production activities have reinforced the certainty of Chinese enterprises' business prospects, Gao said.

China's economy showed strong resilience and strength despite the COVID-19 pandemic, emerging as the only major economy to report growth in 2020 and expanding 9.8 percent in the first three quarters of last year.

"Buying Chinese assets is like buying growth," said Zhou Hao, a senior economist at Commerzbank Asia. "China's economy has long been an important growth engine for the world. Buying Chinese assets reflects foreign investors' pursuit of returns and growth."

The confidence of foreign investors has been given a further boost by the government's economic policies and reform measures.

A series of cross-cycle adjustments introduced in 2021 were conducive to improving the stability of economic growth, and new measures in science and technology could raise total factor productivity, said Zhu Chaoping, a global market strategist with J.P. Morgan Asset Management, adding that China is expected to maintain a higher long-term potential growth rate than other economies.

Foreign investment has also been fueled by China's continued opening-up of the financial market. The three major global index providers -- Bloomberg, JPMorgan and FTSE Russell -- have added Chinese government bonds to their flagship indexes, which helped drive a significant influx of capital to the country's bond market.

China is currently the world's second-largest bond market, with a market size of above 120 trillion yuan, data showed.

Analysts at some international financial institutions forecast overseas demand for Chinese bonds will remain strong in 2022.

At the tone-setting Central Economic Work Conference held last month, Chinese leaders stressed "stability" as the top priority for the nation's economic policies, which boosted foreign investors' confidence in investing in the Chinese market.

The conference helped investors see the stability and predictability of Chinese economic policies and to a large extent soothed their concerns, said Song Yu, chief China economist of BlackRock.

"Treasury bonds will continue to be the most mainstream option for foreign investors, who will also favor industries with high growth and those conforming to green development," said Zhou Hao.

China's economy is expected to maintain steady growth due to sound epidemic prevention and control measures, a large domestic market and precise and timely cross-cycle adjustment policies, said Jiang Xianwei, an analyst at the China International Fund Management Co.

"The country will remain an indispensable investment destination for foreign institutions," he noted.