China bond market is now the second largest bond market worldwide, with a depository balance over 130 trillion yuan, forming a market dominated by interbank and exchange markets and supplemented by the over-the-counter market. China Interbank Bond Market (CIBM) was established in 1997. After over 20 years of evolution, CIBM has grown steadily in scale with enhanced financing function. The infrastructure in this market has been continuously improved amid growing diversity in market participants and trading instruments. The opening up of CIBM is also proceeding steadily. By the end of December 2021, the total depository balance of CIBM reached nearly 115 trillion yuan with market participants nearly 3,800 in terms of incorporated entities, and total trading volume over 1,400 trillion yuan.CIBM is the most important part of China bond market and stands to be the main trading venue for CGBs, policy bank bonds and NCDs which are popular among overseas investors.

 

China bond market adheres to develop in market-oriented, law-based, and internationalized way and its international influence has increased significantly in recent years. With the support of overseas investors, Chinese bonds have been successively included in the three major international bond indexes. Chinese bonds have been included in Bloomberg Barclays Global Aggregate Index (BBGA) and the JPMorgan Government Bond Index-Emerging Markets (GBI-EM) in April 2019 and February 2020 respectively. In March 2021, FTSE Russell announced the inclusion of Chinese government bonds in its World Government Bond Index (WGBI), phased in over 36 months from October 2020.

 

Under the guidance of the PBC, CFETS has jointly revised the China Bond Market Handbook (2022) with NAFMII, SHCH, ICBC, ABC, BOC, HSBC, Orient Securities, Citic Securities and BCCLin both Chinese and English. The Handbook reviews the organizational structure, investment products, trading mechanisms, opening-up policies,business processes of the China Bond Market, and puts the emphasis on the bond market development achievements,reform measures, opening-up optimizationand infrastructures innovations. The Handbook further provides details of the market entry processes, investment and trading mechanisms, and FX conversion and hedging, which covers the issues of concern for foreign investors.Major policies and regulations related to investment in China bond marketare also listed,which we hope would be of help for foreign investors to further understand CIBM and the relevant matters on market admission.

*Source: China Foreign Exchange Trade System & National Interbank Funding Center
*Download: China Interbank Bond Market Handbook (2022)