Summary
This document is a primer on China's onshore bond and foreign exchange (FX) markets, detailing various aspects including market size, issuers, investors, and types of instruments. It outlines that China's domestic bond market is the second largest globally, with a depository balance nearing CNY150 trillion and an outstanding market size of USD22 trillion as of the fourth quarter of 2023. The report describes the composition of cash bond issuers, indicating that central and local governments, along with policy banks, represent a significant portion of the market. It notes the dominance of domestic commercial banks as the primary holders of bonds, accounting for nearly 70% of total outstanding bonds. The document also discusses the recent trends in foreign investment, highlighting a rebound in foreign holdings of Chinese government bonds. Additionally, it categorizes the types of instruments available in the market, including treasury bonds, local government bonds, and corporate bonds, among others, while providing insights into their liquidity and trading dynamics.
