China’s bond market balance is 108 trillion yuan ($15.29 trillion), ranking second in the world, the People’s Bank of China said via its official Wechat account on Friday.
“Bond Connect”, launched in July 2017, has satisfied the needs of overseas investors and promoted China’s bond market’s further opening-up and high-quality development.
The initiative has complemented the original open mode of direct market entry and multiple channels, such as QFII and RQFII.
The People’s Bank of China has made remarkable progress in promoting the financial market’s reform and development actively and steadily, continuously deepening the institutional and systematic opening-up of the bond market.
Adhering to principles of rule of law, marketization and internationalization, PBOC approved three types of overseas institutions, RMB Qualified Foreign Institutional Investor (RQFII) and Qualified Foreign Institutional Investor (QFII) to invest in China’s interbank bond market in 2010.
In 2016, the scope of investors was further expanded to various financial institutions overseas and their investment products.
The launching of Bond Connect on July 3, 2017 was an important milestone in the opening up of China’s bond market.
The initiative allows international investors to access and invest in all types of bonds in the interbank bond market at one point without changing the original trading settlement system arrangements and habits via connection of financial market infrastructure between the Chinese mainland and Hong Kong.
As of the end of June 2020, a total of nearly 900 foreign legal entities have entered the interbank bond market, covering over 60 countries and regions around the world and holding about 2.6 trillion yuan in RMB bonds with an increase of 40 percent each year since 2017.
The current scale of debt held by foreign institutions accounts for 2.4 percent of the total amount of China’s bonds, and the scale of their holding of national debt accounts for 9 percent, the report said.
The People’s Bank of China plans to continue to strengthen the construction of the basic system of the financial market together with relevant departments to further improve the facilitation of international investors’ entry into Chinese market and deepen high-quality market opening-up and development in the next step.