Abstract
This chapter reviews historical lessons, depicts present challenges, and discusses future perspectives of Chinese bond market. Historical lessons on sovereign right concession and market tumult lead to a quite cautious approach toward the bond market. The legal background and political considerations also played an important role in shaping bond market during the past two decades. Given the increasing demand for financing in China these days, the bond market is expected to enjoy some rapid growth in the coming decade and we discuss some areas with particular potentials and the challenges facing the development.
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See for research on rights offering and the linkage between Chinese equity market and the transition of state-owned enterprises.
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For a specific example of the Chinese Eastern Railway, See Goetzmann et al. 2005
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For example, Nicolas Lardy points out in his article that the budget estimate is misleading and the governmental debt is underestimated. China's Worsening Debts, The Financial Times, June 22, 2001, Nicholas R. Lardy.
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Some estimates indicate that the quasi-deficit caused by over borrowing by local governments can be a sizable portion of China’s GDP.
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Nonetheless, there is some reservation that the measures will dampen the bond market in the short run due to worries over an excessive supply of bonds.
References
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Acknowledgments
An earlier draft of the chapter was prepared for the Yale China Conference 2006 and the related book project. The authors benefit from comments from participants at the Yale and BIS-CEPR-HMKA conferences, especially Zhiwu Chen, William Goetzmann (Yale Conference discussant), Fred Hu, and BIS-CEPR-HKMA conference discussants Barry Eichengreen, Guonan Ma, and Richard Portes. Huang is from China International Capital Corporation and can be reached at huanghz2@cicc.com.cn. Zhu is from UC Davis and Lehman Brothers and can be reached at ningzhu@lehman.com. The views as well as errors and mistakes are of the authors.
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Huang, H., Zhu, N. (2009). The Chinese Bond Market: Historical Lessons, Present Challenges, and Future Perspectives. In: Barth, J., Tatom, J., Yago, G. (eds) China’s Emerging Financial Markets. The Milken Institute Series on Financial Innovation and Economic Growth, vol 8. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-93769-4_17
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