## boxfigure1-5-1

## Source details

**Canonical URL:** [boxfigure1-5-1](https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/boxfigure1-5-1.pdf)

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### Overview of Chinese bond market developments
- Trading turnover in China fluctuates more than in other countries.
- Trading volumes tend to fall when interbank rates rise.
- Declines in trading volumes pose risks in the context of growing short-term borrowing because more borrowing must be rolled over and portfolios become more illiquid, reinforcing upward pressures on short-term interest rates.

### Panel summaries and measures displayed
- Panel 1 — "Annual Growth in Three-Month Average Bond Trading Volumes, by Country and Bond Type (Percent)":
  - Compares annual growth in three-month average trading volumes across bond types and countries (government and corporate, China and U.S.).
- Panel 2 — "Rolling 60-Day Sum of Daily Bond Trading to Outstanding Total and One-Month SHIBOR Interbank Interest Rate":
  - Shows 60-day bond turnover (right scale) and interbank yield (left scale, percent).
  - Highlights episodes of >1.5× standard deviation 60-day moves in bond yields.
  - Bond turnover and yields in this panel are based on government bonds.
- Panel 3 — "Chinese Bond Market: Repo Borrowing Outstanding and Trading Volumes (Trillions of renminbi)":
  - Compares total repo market borrowing and average daily trading volume in trillions of renminbi.
- Panel 4 — "One-Month SHIBOR Interbank Interest Rate and Repo Borrowing Outstanding Relative to Average Daily Trading Volume, June 2013–June 2018 (Percent and times)":
  - Plots one-month SHIBOR (percent) and the ratio of repo borrowing to average daily trading volume (times) for June 2013–June 2018.
  - Reported correlation measure: R^2 = 0.7061.

### Risks and dynamics highlighted
- Reduced trading volumes + increasing short-term repo borrowing increase rollover needs and market illiquidity.
- Lower liquidity can reinforce upward pressures on short-term interest rates (e.g., one-month SHIBOR).

### Notes and definitions
- Government bonds includes policy bank bonds but not local government bonds, which have negligible trading.
- SHIBOR = Shanghai interbank offered rate.

*Sources: Bloomberg Finance L.P.; CEIC; ChinaBond; Federal Reserve; Financial Industry Regulatory Authority; WIND Information Co.; and IMF staff calculations.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/oct/ch1/pdf/boxfigure1-5-1.pdf_