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China’s Bond Market: Progress and Policy Options(No.71, 2016)


By Wang Yang, Member of the Research Team on “The Opening-up of China's Capital Market and Sino-British Capital Market Cooperation in the Context of RMB Internationalization”, Research Institute of Finance, DRC

Research report No.71, 2016 (Total 4954) 2016-5-26

Abstract: This report gives a review of the opening-up progress of China’s bond market since 2015. In terms of policy-related banks, the interbank market has accelerated the opening-up progress to foreign institutional investors, whereas the amount of inbound investment has decreased to some extent. The pace of issuing panda bonds has accelerated, and the offshore RMB bond market has been expanded with a limited aggregate volume. China’s bond market in the context of RMB internationalization is witnessing an optimized moment with great opportunities of opening-up. Such opportunities include: the bond market will enjoy the top priority in financial opening-up; RMB internationalization will stimulate the increased demand for yuan-denominated bonds; the high demand for financing at home will be satisfied with low cost of financing in overseas market. In face of the present performance and future development of bond market, some policy options are proposed as follows. The government needs to promote coordination and unification of the bond market; enhance the construction of credit system in bond market; improve the structure of investors and increase market liquidity; steadily push forward RMB exchange rate reform and capital account opening-up; balance onshore and offshore RMB market; and further expand the issuance of cross-border bonds.

Key words: RMB internationalization, bond market, opening-up, panda bond