China Expands Bond Repurchase Business for Overseas Institutional Investors

Strategic Insights -

China's bond market has gained significant traction globally, with 1,170 overseas institutions from 80 countries and regions holding around RMB 4 trillion in Chinese bonds as of end-August 2025. To further tap into this growth, the People's Bank of China (PBOC), the China Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange (SAFE) jointly issued an announcement to support overseas institutional investors in conducting bond repurchase (repo) business in China's Interbank Bond Market (CIBM). This move is aimed at enhancing connectivity between onshore and offshore financial markets, promoting high-level opening-up of China's bond market, and meeting the liquidity management needs of overseas investors.

Key Takeaways:

  • The announcement enhances support for various types of overseas institutional investors to conduct bond repo business in China's bond market, including overseas central banks or monetary authorities, international financial organizations, and sovereign wealth funds.
  • Eligible types of investors are:

+ Overseas central banks or monetary authorities

+ International financial organizations

+ Sovereign wealth funds

+ Commercial banks

+ Insurance companies

+ Securities firms

+ Fund management companies

+ Trust companies

+ Pension funds

+ Charitable funds

+ Endowment funds

  • Overseas financial infrastructures, self-regulatory organizations, and industry associations may provide services for overseas institutional investors engaging in bond repo business in the CIBM.
  • Overseas institutional investors can conduct bond repo business through:

+ Transferring underlying bonds to repo buyers and reusing them

+ Continuing to conduct transactions under the previous model during the 12-month transition period

  • The PBOC has improved the design of processes of bond repo business for overseas institutional investors, including trading, custody, settlement, and exchange, achieving closed-loop management of funds.
  • Market makers for the Bond Connect will trade with market makers having ample funds and robust capability to quote bonds, selected from open market primary dealers with a good track record of market-making in the Bond Connect.

Statistics:

  • As of end-August 2025, 1,170 overseas institutions from 80 countries and regions have entered the Chinese bond market, holding around RMB 4 trillion in Chinese bonds.
  • China's bond market has been included in the three major international bond indices: Bloomberg Barclays, J.P. Morgan, and FTSE Russell.
  • The PBOC has supported overseas sovereign institutions, RMB clearing banks, and participating banks to engage in bond repo business in the CIBM since 2015.

Sources:

  • People's Bank of China, China Securities Regulatory Commission, and State Administration of Foreign Exchange. (2025). Announcement on Further Supporting Overseas Institutional Investors In Conducting Bond Repurchase Business.