China's bond market balance hits 108 trillion yuan, ranking second globally

Source:Global Times Published: 2020/7/3 14:15:32

China’s central bank. Photo:cnsphoto

China's bond market balance has hit 108 trillion yuan ($15.28 trillion), ranking second globally, the country's central bank announced on Friday. 

As of June, nearly 900 corporate bodies from more than 60 countries and regions across the globe have entered China's interbank bond market, holding bonds with a total value of about 2.6 trillion yuan, the central bank said. The growth rate has been maintained at nearly 40 percent since 2017. 

"China has been striving to ease the limits for foreign capital to enter its bond market, aiming to attract more investment to the country," Liu Xuezhi, a macroeconomics expert at the Bank of Communications, told the Global Times on Friday. 

Currently, China's bond market balance matches its economic aggregate as both rank second globally. But the structure of the domestic capital market has room for improvement as most of foreign direct investment relies on the banking system rather than indirect financing via bonds, he said. 

Overseas bond holders account for 2.4 percent of China's total bond holdings, according to the People's Bank of China. Chinese government bonds held by overseas bond holders account for 9 percent.

Liu noted both proportions are relatively low compared to major global economic powers, but highlighted that the country will continue efforts to open up its domestic financial market. 

"Amid the coronavirus pandemic, foreign investment will remain optimistic toward China's opening up of its financial market, including its bond market, because China is the first great power to contain the virus and resume production," he said, adding that it is clear both the pace and strength of China's financial sector opening-up have been enhanced. 

According to statistics from the State Administration of Foreign Exchange on June 19, net purchases of bonds by foreign funds in May grew 104 percent from April to $19.4 billion.

That demonstrated the trend of strong capital flows to China. The latest figures from the Shanghai Clearing House showed that foreign ownership of China's onshore bonds has hit a record high.

By the end of May, foreign capital had been continually increasing holdings of Chinese bonds for 18 consecutive months, the clearing house said. 

The central bank said it will continue to improve the construction of the financial market's basic system, promote the domestic bond market and facilitate global investors' convenient entry into the Chinese market. 


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