Some of China’s biggest state companies traded US-dollar debt for renminbi and ramped up dollar deposits in the second half of last year in a dual-pronged effort to eliminate higher US interest payments and bet on depreciation of the local currency.

Across emerging markets companies have sought to ditch US dollar debt following the US Federal Reserve’s decision to raise interest rates in December last year. In China, the weakening renminbi — down 4.19 per cent since the one-off devaluation on August 11 last year — has provided further incentive to be long on the dollar. However, since the start of the year, the currency has appreciated slightly.

Mainland listed companies reduced offshore dollar debt by $37bn during the six-month period, or by about 35 per cent since June, according to data from Wind Financial Information. At the same time, the companies grew their offshore dollar deposit bases by $11bn, a 40 per cent increase over the same period.