Author: GAO Zhanjun GAO Jian ZHOU  Aimin

With the development of China's economy and the gradual improvement of the pattern of financial opening-up to the outside world，China's bond market has become an important place for global capital allocation. At a roundtable discussion organized by China Forex，GAO Zhanjun，the Executive Editor-in-Chief of China Forex，GAO Jian，the former Vice President of China Development Bank，and ZHOU Aimin，the Deputy General Manager of Industrial and Commerical Bank of China，shared their views on policy suggestions on China’s bond market. The conversation，which follows in edited form，was moderated by GAO Zhanjun.

GAO Zhanjun: The Chinese bond market has been opening up to the outside world at a rapid pace. In August 2010，the Global Connect was launched，enabling overseas institutions to directly participate in the market. In July 2017，the Northbound under China’s Hong Kong’s Bond Connect was launched，and in September 2021，the Southbound Trading under China's Bond Connect program was officially came into practice. In addition，overseas investments in domestic renminbi bonds have grown from 600 billion yuan at the beginning of 2015 to as much as current 4 trillion yuan. These developments and numbers are epitome of the bond market opening up since China resumed government bond issuance in 1981. What’s your insight on this?

GAO Jian: As early as the early 1990s，it was not long after China’s government bond market was established that the opening up of China’s bond market was put on the agenda. Since 2000，the opening up of the bond market has taken a new step，marking an important milestone in integrating China’s bond market with the international capital market. In 2001，China joined the World Trade Organization (WTO)，speeding up the opening of the financial sector. Since the beginning of the 21st century，China’s bond market has started a new chapter of opening to the world. In 2010，an interconnection mechanism between the domestic bond markets was established. Since 2018，more than 50 opening up measures have been introduced successively，including several measures to open up the bond market. The accelerated opening of the bond market mainly benefited from: First，China’s rapid economic growth and expansion in the process of globalization. After four decades of adjustment and growth since the reform and opening up in 1978，China has surpassed Japan to become the world’s second largest economy only after the United States. In 2021，China’s GDP comprised 18.67% of the world’s total. The world has high hopes for China in the future globalization. Second，the quickening pace of the RMB internationalization. It has been accompanied by a continued increase in cross-border payments processed through the RMB Cross-border Interbank Payment System (CIPS) since the third quarter of 2020. According to the latest data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT)，in December 2021，the share of the RMB in international payments rose to the fourth place，surpassing the Japanese yen. Third，the acceleration of financial opening up. At present，the opening up of China’s financial sector including banking，securities，funds，futures，and insurance industries is gathering pace，with the foreign ownership limitations completely removed. Fourth，the development of the bond market infrastructure and convenient settlement and custody methods. Fifth，the interconnection between bond markets actively promoted by the regulatory authorities. They have launched a series of opening up policies to continuously relax market access requirements，simplify access procedures，and expand investment channels. At present，the bond market is one of the most open markets in China’s financial sector. The above proves that the conditions are in place for the full opening of China's bond capital market.