The emergence of China as an economic superpower

There is great potential in China's corporate bond market. While Chinese stocks and government bonds have expanded so far and so fast to the point of overheating the economy, the country's next fund-raising tool in line, Chinese corporate bonds, lag behind (as well as corporate bond derivatives). This may be attributed to the fact that, previously, many of the largest players in this market are domestic firms and HSBC plc, hence scope and liquidity are both quite limited.

For a quick comparison, the US has a bond market almost 1.5 times its GDP, the world has a bond market equal to the global GDP, and China has a bond market about a quarter of its GDP. Although the figures does not sound promising, new players who are entering this arena hope to give the market future potential.

Today, the People's Bank of China, China's central bank, appointed Standard Chartered plc and JP Morgan Chase & Co. to underwrite commercial bills issued by the China's finance ministry. Almost four years since HSBC plc was first admitted, the first foreign bank to be granted a licence to underwrite bonds in China, the new relaxation of state control over corporate bond underwriting gives hope to foreign banks who want a share of the market that further allowances will occur.

What is the future of Chinese commercial bonds?