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Abstract
This article analyzes China’s bond market, which covers the interbank market, exchange market, and bank counter market. We compare various types of bonds and discuss their latest trends, which to a large extent are driven by government policies, resulting in rapid growth in central government and local government bond issues. The recent launch of the “Bond Connect” trading platform for bond transactions between mainland China and Hong Kong and the emergence of many new bond types suggest that China’s bond market may provide more investment and growth opportunities for global investors.
Notes
1 See for details. Total outstanding government bonds are comprised of: (1) Treasury bonds, which comprise Treasury bonds and bills, savings bonds, and local government bonds; (2) central bank bonds, which were issued by the People’s Bank of China and discontinued in February 2017; and (3) policy bank bonds, which are issued by the Agricultural Development Bank of China, China Development Bank, and Export–Import Bank of China. For comparison purposes, all RMB amounts are roughly converted to US$ at an exchange rate of RMB 6.30 at the time of this writing.
2 The Anatomy of China’s Bond Market, http://www.sohu.com/a/135521251_499067, April 20, 2017.
3 Based on data from Wind.
4 Based on data from http://www.sifma.org.
5 With regard to China’s public debt to GDP ratio, Sun (Citation2018) finds that while the nonfinancial private debt to GDP ratio has significant negative impact on China’s growth, the effects of the ratio of public debt to GDP are insignificant.
6 It is worth noting that while the U.S. bond market growth has been relatively steady, Japan’s bond market has experienced erratic growth due to Prime Minister Shinzō Abe’s economic policies, that is, Abenomics, and other factors.
7 See Lee (Citation2017).
8 See Dai (Citation2018).
9 See Li and Qian (Citation2017).
10 See Zhong (Citation2017).
11 See Meng (Citation2017).
12 See Lee (Citation2017).
13 See Cushnie (Citation2016).
14 The IFC, the private sector arm of the World Bank, has been one of the most active Panda bond players. It issued the first Panda bond in 2005, and in recent years several large ones including some green bonds.
15 See Jones (Citation2018).
16 See Zhang (Citation2018).
17 See Dong et al. (Citation2018).
18 See Armstrong (Citation2018).
19 See Tu (Citation2018).