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China's Bond Market and Global Financial Markets

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  • Mr. Eugenio M Cerutti
  • Mr. Maurice Obstfeld

Abstract

A cross-country comparative analysis shows that there is substantial room for further integration of China into global financial markets, especially in the case of the international bond market. A further successful liberalization of the Chinese bond market would encompass not only loosening bond market regulations, but also further developing of other markets, notably the foreign exchange market. Even though the increased integration of China into international capital markets would increase its exposure to the global financial cycle, the costs in terms of monetary autonomy would not be large given China’s size and especially under a well-articulated macroeconomic framework.

Suggested Citation

  • Mr. Eugenio M Cerutti & Mr. Maurice Obstfeld, 2018. "China's Bond Market and Global Financial Markets," IMF Working Papers 2018/253, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2018/253
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=46252
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    References listed on IDEAS

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    1. Dong He & Lillian Cheung & Wenlang Zhang & Tommy Wu, 2012. "How would Capital Account Liberalization Affect China's Capital Flows and the Renminbi Real Exchange Rates?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 20(6), pages 29-54, November.
    2. Guonan Ma & Robert N. McCauley, 2014. "Financial openness of China and India- Implications for capital account liberalisation," Working Papers 827, Bruegel.
    3. Cerutti, Eugenio & Claessens, Stijn & Puy, Damien, 2019. "Push factors and capital flows to emerging markets: why knowing your lender matters more than fundamentals," Journal of International Economics, Elsevier, vol. 119(C), pages 133-149.
    4. Eugenio Cerutti & Stijn Claessens & Andrew K. Rose, 2019. "How Important is the Global Financial Cycle? Evidence from Capital Flows," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 67(1), pages 24-60, March.
    5. Sun Guofeng, 2015. "Financial Reforms in Modern China," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-50444-9, December.
    6. Forbes, Kristin J. & Warnock, Francis E., 2012. "Capital flow waves: Surges, stops, flight, and retrenchment," Journal of International Economics, Elsevier, vol. 88(2), pages 235-251.
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    Cited by:

    1. Lin, Mucai & Niu, Linlin, 2021. "Echo over the great wall: Spillover effects of QE announcements on Chinese yield curve," Journal of International Money and Finance, Elsevier, vol. 111(C).

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