U.S. and China Bond Outstanding as of GDP and Market
This figure illustrates that China bond market has gone through tremendous development during the past ten years, which is an integral step of China financial reform. The first chart in figure one depicts the growing market capitalization scaled by GDP, from 38% in 2008 to 90% in 2017. The second chart shows that China bond market experiences a steady uprising trend relative to stock market, catching up the U.S. level which is about 130% in 2017.
Source: Handbook on China’s Financial System: Chinese Bond Market and Interbank Market, by Marlene Amstad and Zhiguo He
Outstanding Bonds in Chinese and U.S. Bond Markets, 2008-2017
This figure presents the time-varying composition of bond markets in China and U.S. by issuing entities: government, financial institutions and non-financial corporations. Non-government bonds has grown rapidly during the past ten years from 15% of the total market capitalization in 2008 to 42% in 2017. The China bond market, which reached 75 trillion RMB in 2017, has become an important channel to transfer household saving to the real sectors in the economy.
Source: Handbook on China’s Financial System: Chinese Bond Market and Interbank Market, by Marlene Amstad and Zhiguo He
Chinese Bond Market and Interbank Market: Number and Amount of Defaults per Year
This figure reports the number and the amount of defaulted bonds, both in absolute value (first chart) and in percentage relative to all corporate bonds (second chart). Before 2014, investors believed that bonds were implicitly guaranteed by government. The burst of defaults in 2016 was driven by the tightened liquidity and deepening financial deleveraging campaign of the government. Although the percentage of defaults reaches its highest peak (0.6%) in 2018, it is relatively low compared to the global counterpart which is 1.8% during 2008-2017 according to a recent report by Moody’s.
Source: Handbook on China’s Financial System: Chinese Bond Market and Interbank Market, by Marlene Amstad and Zhiguo He
