China's Bond-Connect Program in Five Charts

Executive director of the Asia New Zealand Foundation Simon Draper

Global investor access to China's financial markets is widening further with the launch of a bond trading link with Hong Kong.

Initially, Chinese bonds can be bought by banks, insurers and fund managers via Hong Kong.

Southbound trading would be explored at a later stage, the new Bond Connect website said.

The launch has been timed to coincide with the 20th anniversary of Hong Kong's handover to Chinese rule. "It will also steadily push forward the opening up of China's financial market". It will enable eligible overseas investors to access, for the first time, the Mainland interbank bond market through infrastructural connection established between the Mainland and overseas bond markets. Other programs have allowed certain investors to buy Chinese bonds for years. After months of detailed preparation by the Central People's Government, the Hong Kong SAR (Special Administrative Region) Government and the relevant institutions in both places, we are about to witness the launch of Bond Connect. The onshore yield is 81 basis points lower than the corresponding Chinese government debt offshore, known as Dim Sum bonds, at 4.38 percent.

China cancels Indian journalists trip to Tibet
On the Sikkim standoff, the Xinhua commentary claimed that China is engaged in normal activities on its own territory. Xinhua has also reported that the two neighboring countries came to an agreement in 2012 about the Sikkim border.

China's $9 trillion bond market is the third-largest in the world, but only 2% of Chinese bonds are foreign-owned.

China has for years faced foreign complaints about restricted access to its markets, but has recently made a series of liberalisation pledges partly to expand its global market influence.

Utilisation of the new bond connect platform, however, could hinge on fears of mounting Chinese debt levels which have prompted warnings of a looming crisis and possible defaults.

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