CHINA vowed to push ahead with opening its bond market to foreign investors, with a senior central bank official saying it was crucial for the development of the nation’s financial markets.

“We have some thoughts about how to further open up the bond market,” People’s Bank of China Deputy Governor Pan Gong- sheng said Thursday.

“We’re researching and plan to issue new index products such as bond ETFs to facilitate foreign investors, and will improve connectivity between central custodian institutions.”

Foreign investors’ holdings in China’s total bond market rose to 2.3 percent by the end of 2018, Pan said. It was 1.6 percent at the end of 2017.

The share held by foreign investors in the government bond market rose to 8.1 percent by the end of last year, Pan said, from about 6 percent at the end of April 2018.

China has accelerated the opening of its financial market to foreign investors since late 2017 by lifting some curbs on the ownership of financial institutions. In a recent move, it doubled the limit of the Qualified Foreign Institutional Investor program to US$300 billion.

Pan praised the development of the local bond market, noting that it had high yields and a relatively low default rate of 0.79 percent at the end of 2018. He added that a certain level of defaults could benefit the bond market in the long term.

In addition to allowing more investors to access the local bond market, China also wants to encourage more overseas issuers to tap its debt markets to raise money. (SD-Agencies)