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China’s bond market has become one of the largest and most important investment destinations in the world, but foreign investor participation remains relatively low. More innovations are expected in the bond market after the Chinese regulators issued new rules for foreign institutional investors.January 11, 2023 | Ruoxin Qi
On 18 November 2022, the People’s Bank of China (PBoC) and the State Administration of Foreign Exchange (SAFE) issued “The Provisions on the Administration of Funds of Foreign Institutional Investors Investing in the Chinese Bond Market”. It clarifies the requirements for the administration of funds of foreign institutional investors. China Construction Bank (CCB) aims to leverage the market-opening policies to introduce product and service innovations to attract more foreign investors.
As of 31 July 2022, the total size of China’s bond market reached $21 trillion (RMB 147 trillion), making it one of the most important markets for cross-border bond investment. Foreign investment in China’s bond market, however, makes up only 3% of the total and is mostly in government bonds and policy-bank bonds. According to ChinaBond.com, as of October 2022, foreign institutions hold 9.4% of government bonds and 3.6% of policy lender bonds and have limited investment in regional government bonds (0.03%), commercial bank bonds (0.43%), corporate bonds (0.12%), credit asset-backed bonds (0.90%) and other varieties. There is still plenty of room for improvement in the openness of China’s bond market, and more innovations are expected to attract investments from overseas.
Deepening China’s bond market not only serves the...
Keywords:CCB, PBoC, ESG, Bond Market, Cross-border Bond Investment, RMB, Global Dcm Access
|The Chinese Yuan: Internationalization and Financial Products in China (Wiley Finance)
Date: Feb 22, 2011