China's bond market opens up but hurdles remain

Even with greater access to the $5.4 trillion market, foreign investors remain wary of capital controls and foreign exchange risk.

Beijing’s latest effort to expand access to its domestic bond market has largely been welcomed by foreign investors but concerns over cross-border capital flows and exchange rate risk remain.

In a statement on its website late Wednesday, the People’s Bank of China said most types of overseas financial institutions will no longer require prior approval or quotas to invest in the country's Rmb35 trillion $5.4 trillion interbank bond market. 

The move dovetails with China's long-term goal to integrate more fully with global financial markets by dismantling currency controls. But a more pressing motive could be to support the country’s financial system by offsetting capital...

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