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Tapping into China’s domestic bond market ― An international perspective

A well-developed RMB bond market with a high level of foreign participation is an essential attribute that underpins RMB as an international reserve currency. The growth potential of foreign holdings of RMB bonds would be considerably large, given the size of China’s economy and the RMB bond market. However, due to the restrictions under the current market opening programmes for foreign investors, the degree of foreign participation in China’s bond market is significantly lower than those in the countries with international currencies and even some emerging markets. This reveals the needs to enhance market infrastructure, trading rules and financial products with innovative measures in order to further advance RMB internationalisation. At present, China runs three main programs that allow foreign investors to access the domestic bond market.[…]