China's bond market growing rapidly, even as foreign investor interest remains weak.

China's onshore bond market has experienced significant growth, reaching 133 trillion yuan (18.3 trillion dollars) as of mid-2023, equivalent to 107% of China's GDP. The market grew by 8% year-on-year, although at a slower rate than in previous years. The public sector, including the central government, local governments, and policy banks, is the largest issuer of bonds in China, while corporate bonds make up the remaining third. Foreign investor interest in China's bond market remains weak due to capital account restrictions, with foreign investors holding only around 2% of bonds. However, the inclusion of Chinese sovereign bonds in major international bond indices is expected to increase foreign investor participation in the future. Despite concerns such as a potential credit-rating downgrade and the real estate sector crisis, Chinese investors continue to show demand for domestic bonds as a strategy to reduce risk exposure. [Extracted from the article]