Investing into China's Growing Onshore Bond Market

In this Smartkarma Original, we dig into the onshore bond market of China, covering key topics include historical background, market structure, market segments and key participants, growth drivers, evolving trends, market dynamics around foreign participations and challenges for foreign investors. The Chinese onshore bond market is a complicated one. This Smartkarma Original does not attempt and cannot cover all areas in the market, but is expected to highlight the most important areas that global institutional investors need to know in their decisions to make investment in this gigantic and rapidly-growing market.

What’s Original?

The China onshore bond market, with outstanding notional value of RMB95.7trn, is now the second largest in the world. However, foreign ownership of onshore bonds is outrageously low at just 2.3%. In this Smartkarma Original, besides exploring the key facets of this market, we discuss the key trends in the future and the main challenges faced by global institutional investors.

This Smartkarma Original draws views from rating industry, institutional investors and the banking industry and local resources to provide a comprehensive picture on the development of China's onshore bond market. More importantly, we look at the market from the perspective of investors, which is different from the perspectives of the issuers and investment banks.

We believe there is no way to stop the growth of China's onshore bond market and more will be done by the regulatory authorities to improve the appeal of the market to foreign investors - this is a market that foreign institutional investors simply cannot afford to ignore.