Bond China Aggregate Index Onshore RMB Bonds 2026
The bond market in China has shown remarkable resilience and growth, particularly in the onshore RMB bonds sector. As of 2023, the total value of China’s bond market surpassed RMB 130 trillion, making it one of the largest in the world. The onshore RMB bond market has attracted increased attention from global investors, with foreign ownership reaching approximately 10% of the total market by mid-2023. This report delves into the Bond China Aggregate Index, focusing on onshore RMB bonds projected for 2026.
1. China Government Bonds
China government bonds account for about 70% of the total onshore RMB bond market. With a market value of approximately RMB 90 trillion, these bonds are crucial for financing government projects and infrastructure development.
2. Policy Bank Bonds
Issued by China’s policy banks such as the China Development Bank, these bonds represent around 15% of the onshore market. The total issuance reached RMB 10 trillion in 2023, supporting national economic development initiatives.
3. Corporate Bonds
Corporate bonds contribute significantly to the onshore market, with a total outstanding value of RMB 30 trillion. In 2023, corporate bond issuance grew by 25%, reflecting companies’ increasing focus on diversification of funding sources.
4. Financial Bonds
Financial bonds issued by commercial banks make up approximately 8% of the onshore market, valued at RMB 7 trillion. These bonds are instrumental in managing liquidity and funding bank operations.
5. Local Government Bonds
Local government bonds saw issuance of RMB 3 trillion in 2023, accounting for about 2% of the market. These bonds are essential for funding regional infrastructure projects and public services.
6. Green Bonds
China is a leading issuer of green bonds, with an issuance of RMB 1 trillion in 2023. Green bonds represent about 1% of the onshore market, reflecting the country’s commitment to sustainable development.
7. Short-Term Financing Bonds
Short-term financing bonds have gained popularity, reaching RMB 2 trillion in 2023. These bonds offer companies a quick funding solution and account for about 1.5% of the onshore market.
8. Asset-Backed Securities (ABS)
ABS in China have seen significant growth, with a total market value of RMB 1.5 trillion. This asset class provides investors with diversified investment opportunities, representing about 1% of the market.
9. Treasury Bonds
Treasury bonds, a sub-category of government bonds, hold a market value of approximately RMB 30 trillion. They are a favored investment for both domestic and foreign investors due to their low risk.
10. Rural Credit Cooperatives Bonds
These bonds provide funding for rural development projects, with a total issuance of RMB 500 billion in 2023. They represent a niche market but play a vital role in rural financing.
11. Enterprise Bonds
Enterprise bonds have a market size of RMB 800 billion, allowing state-owned enterprises to raise capital. The issuance in 2023 was crucial for supporting large-scale projects.
12. Municipal Bonds
Municipal bonds reached RMB 400 billion in 2023, providing local governments with the necessary capital for public projects. Their market share is steadily increasing as local governments seek alternative funding sources.
13. Commercial Paper
Commercial paper issuance was approximately RMB 1 trillion in 2023, providing companies with a flexible and short-term funding mechanism. This segment has seen robust growth as businesses adapt to changing financial landscapes.
14. Foreign Currency Bonds
China issued foreign currency bonds valued at RMB 300 billion in 2023, allowing companies to tap into international markets. This segment is growing as firms seek to diversify their funding sources.
15. Panda Bonds
Panda bonds, issued by foreign entities in RMB, saw a total issuance of RMB 200 billion in 2023. They offer international investors an opportunity to participate in the Chinese bond market.
16. Investment-Grade Corporate Bonds
Investment-grade corporate bonds make up about 60% of all corporate bonds issued in China, valued at RMB 18 trillion in 2023. These bonds are favored for their lower risk and higher credit ratings.
17. High-Yield Corporate Bonds
High-yield corporate bonds reached RMB 12 trillion in 2023, catering to investors seeking higher returns. However, they come with increased risk, reflecting the evolving risk appetite among investors.
18. Municipal Financing Vehicles (MFVs) Bonds
MFVs issued bonds worth RMB 700 billion in 2023, providing local governments with alternative financing sources for infrastructure projects. Their market share has been increasing as local governments seek innovative funding mechanisms.
19. Social Bonds
Social bonds, focusing on social projects, reached RMB 100 billion in 2023. This segment is gaining traction as investors are more inclined toward socially responsible investments.
20. Inflation-Linked Bonds
Inflation-linked bonds have seen a market size of RMB 50 billion. These bonds are designed to protect investors from inflation, reflecting growing concerns about price stability in the economy.
Insights
The onshore RMB bond market continues to expand, driven by government support and the increasing participation of both domestic and international investors. By 2026, it is projected that the market will reach RMB 150 trillion, driven by the growth of specific segments like green bonds and infrastructure financing. Additionally, as China boosts its sustainable financing initiatives, green bonds alone are expected to surpass RMB 3 trillion by 2026, indicating a significant shift in investment strategies and priorities in the onshore bond market.
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