The china bond market is in a developing phase. The government of the PRC is trying to make the bond market one of the best in Asia as quickly as possible. The development of the bond market is very necessary for the development of the country also.
The government needs fund to finance the projects related to the infrastructure like development of electricity plants, roads and ports so that the level of the development of the country can be maintained. These projects are also very important to provide employment to the citizens.
In the present time also, a huge number of Chinese companies are relying on the banks and the stock market for finance to meet their needs. The government is trying its best to encourage the practice of issuing corporate bonds and generate long term funds through that. This in turn would provide depth to the China bond market.
At the same time, through corporate bonds, the private companies can develop their instrument of self financing. The rules and regulation regarding the China bond market, created some obstacle in the development of the market.
But at present the government has introduced several new regulations because the Chinese government has also felt that in absence of a strong bond market, the capital market of China cannot grow further. So with the necessary modifications in the China bond market, the government is expecting to raise 160 billion Yuan in 2007 through the corporate bonds.
The positive efforts of the government provided enough support to the companies and this resulted in the development of both the short-term and long term bond market in China. The short term bond market has raised nearly $27 billion from the market till the third quarter of 2007. At the same time, the long term bond market has raised $13 billion within the same period.
On the other hand, the development of the bond market in China also needs some reformatory works th the financial systems also. These reforms includes the reformation of the bank interest rates of the country because the movement of the bonds are related to the bank interest rates.
With the development of the market, a number of foreign investors have invested in the China bond market. Among these, there are the financial giants like New York Life Insurance, American International Group and Citigroup and a number of fund managers are also investing in the market. All these are providing the necessary depth to the China bond market.
Last Updated on : 10th July 2013