Current Situation, Problem and Solution of the Bond Market of China

Abstract

In 2010, the economy scale of China has become the second largest in the worldwide after exceeding Japan which just next to the economy scale of United States which has kept playing an important role in the global economy. In this case, more and more attention has been focused on it and especially for its financial market which is young but huge in scale. However, as the Chinese financial market was firstly established in 1993, the history of its development is very short and the research related to it is very limited, particularly for the bond market of China which has a very different institution and structure compared with the bond market of the main developed countries in the world where the main changes are followed by the instruction and plan of the government. As the bond is the financial instrument which decides the interest rate, its market has a great influence on the financial liquidity of the whole economy. In addition, the high interest rate in the bond market of China compared with the other bond market has also attracted the foreign investors in the whole world to increase their investment to the market. Therefore, studying the bond market of China is very helpful in understanding the current situation of the bond market of China so as to find out its problems and solutions which are very important for the economy to grow in a healthy way. In this paper, the solutions of how to solve the problems about the risk, market efficiency and the sustainable development of the bond market of China will be analyzed based on its current situation including the structure and scale.