Key features of the Chinese bond market

In the 21st century, China ranks among the global leaders based on quantitative factors, not only from a real economy perspective but also from a financial one. It is the largest exporter and one of the biggest economies in the world. Based on the IMF’s decision, the Chinese currency will be included in the SDR basket containing the major currencies of the world. Currently, the world’s third largest bond market is found in China. It is huge both in real economy and financial terms, and foreign investors are gradually being granted access to this market, at the pace and to the extent determined by Chinese regulators. The onshore bond market that has been opening up at an increasing pace recently and the offshore bond market that will mark its 10th anniversary next year may be uncharted territory for financial institutions. Entry to the market may be facilitated by gaining information about the characteristics of the market. This article presents the key features of the Chinese bond markets from both the issuer and the investor side, examining the individual market segments as well, and pointing out the opportunities and expected paths of development on the markets. In addition, we demonstrate how the Chinese bond markets fit into the political efforts targeting the achievement of global currency status for RMB.