China's Bond Market and Global Financial Markets

IMF Working Papers, December 7, 2018

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A cross-country comparative analysis shows that there is substantial room for further integration of China into global financial markets, especially in the case of the international bond market.
A further successful liberalization of the Chinese bond market would encompass not only loosening bond market regulations, but also further developing of other markets, notably the foreign exchange market.
Even though the increased integration of China into international capital markets would increase its exposure to the global financial cycle, the costs in terms of monetary autonomy would not be large given China’s size and especially under a well-articulated macroeconomic framework.

Liberalize bond market regulations to facilitate deeper integration with global bond markets.
Further develop complementary domestic markets, notably the foreign exchange market, alongside bond market liberalization.
Maintain a well-articulated macroeconomic framework to limit costs in terms of monetary autonomy as integration with international capital markets increases.

Subjects: Bonds; Currency markets; Emerging and frontier financial markets; Financial institutions; Financial markets; Securities markets; Stock markets
Keywords: bond market; Bonds; China; China's bond market; Currency markets; dollar; Emerging and frontier financial markets; Global; global bond bond market; Globalization; market; Market Integration; non-profit institution; Securities markets; stock market capitalization; Stock markets; U.S. dollar; WP; yield; yield differential

China’s Bond Market and Global Financial Markets, WP/18/253, December 2018
- China’s Bond Market and Global Financial Markets, WP/18/253, December 2018 (Markdown version)
- China’s Bond Market and Global Financial Markets, WP/18/253, December 2018 (PDF)