Editor’s Note: This article, by S&P Global Ratings and S&P Global (China) Ratings, is a thought leadership report that neither addresses views about ratings on individual entities nor is a rating action. S&P Global Ratings and S&P Global (China) Ratings are separate and independent divisions of S&P Global.

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Total bonds outstanding of US$17.4 trillion. Real yields in excess of 100 basis points over equivalent debt in U.S. dollars. Low correlation with global assets. Such numbers speak to the potential of the domestic Chinese bond market, which is only about 3% foreign owned. S&P Global Ratings expects China’s ambitious measures to open one of the world’s largest bond markets to prompt a global migration.

China is liberalizing its bond market as part of a wider reform effort to establish the renminbi as an international currency, diversify sources of domestic funding, and improve its allocation of…

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