WASHINGTON: China's bond market, already the third largest in the world, has a particular role to play in the country's greater financial integration into the global economy, an International Monetary Fund (IMF) official has said.
"Last year China celebrated its 40th anniversary of reform and opening-up, which contributed to China's trade and product integration," said Alfred Schipke, the IMF senior resident representative for China, report agencies."But if you're looking at the future, our view is that the future will be about China's financial sector integration with the world and the bond market will play a particular role," Schipke told Xinhua in a recent interview.
Starting next month, "China will be included in the Bloomberg Barclays global bond index and that's a milestone for China's financial sector integration globally," he noted.
Bonds issued by the Chinese government and policy banks will be included in the Bloomberg Barclays Global Aggregate Bond Index beginning in April, with a 20-month phase-in period, Bloomberg confirmed in late January.
After their full inclusion, Chinese renminbi (RMB)-denominated bonds will become the fourth largest currency component, following the U.S. dollar, the euro and the Japanese yen.
"It will effectively lead to more purchases of Chinese bonds by foreigners and provide investors globally with an opportunity to diversify their assets," Schipke said.
It also requires that policymakers and investors both in China and abroad have a better understanding of the structure of China's bond market and its unique characteristics, he added.