China Opens Bond Repo Market Wider to Foreign Investors in Push for Global Integration
By Wang Shiyu and Denise Jia
China on Thursday opened wider doors to its $21 trillion bond market, granting foreign investors full access to repurchase transactions in a move regulators said will align the country more closely with global standards and deepen liquidity.
In a joint notice, the People’s Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange said all qualified foreign institutions — including those trading through the Bond Connect link — may now take part in repos, a key short-term financing tool in global debt markets.
The move underscores Beijing’s push to internationalize its bond market at a time when policymakers are keen to attract stable long-term capital and bolster the appeal of the yuan.
As of the end of August, 1,170 foreign institutions from 80 countries and regions held roughly 4 trillion yuan ($550 billion) worth of Chinese bonds. They include central banks, sovereign wealth funds, commercial lenders, insurers, and asset managers.
Until now, China’s repo system operated differently from global practice: securities were “frozen” with the lender rather than transferred to the borrower. The new rules shift to the global model, in which underlying bonds change hands during repo deals, making rights and obligations clearer and default handling easier.
“Foreign investors have long favored the transfer model as it clarifies accountability and improves market liquidity,” the central bank and FX regulator said in a joint statement.
Bloomberg Asia-Pacific President Li Bing said the reform would expand channels for offshore investors to access yuan liquidity. “It will make yuan assets more attractive globally, enhance market-making capacity, and accelerate China’s financial integration,” Li told Caixin.
China has gradually eased repo access for foreign entities over the past decade, starting with sovereign institutions and clearing banks. In February, northbound Bond Connect launched offshore repo trades in yuan, later expanding to U.S. dollars, euros and Hong Kong dollars, with collateral reuse permitted.
Under the new announcement, a 12-month transition period will allow investors already using the old “freeze” model to adjust. Repos conducted through Bond Connect will initially follow existing cash settlement mechanisms, with leverage limits tied to interbank market rules.
Dealers participating in the program will be selected from top-performing primary market makers and must demonstrate strong funding and pricing capacity, regulators said.
The reform adds momentum to China’s broader push to make its financial markets more transparent, accessible, and globally competitive, even as geopolitical tensions and domestic slowdown cloud investor sentiment.
Contact reporter Denise Jia (huijuanjia@caixin.com)
caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Global Neighbours is authorized to reprint this article.
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