Core Viewpoint - The People's Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly announced measures to further support foreign institutional investors in conducting bond repurchase transactions in the Chinese bond market, enhancing the attractiveness of RMB-denominated bonds and optimizing the Qualified Foreign Institutional Investor system [1][2]. Group 1: Support for Foreign Institutional Investors - The announcement allows all types of foreign institutional investors, including central banks, sovereign wealth funds, commercial banks, and asset management firms, to participate in bond repurchase transactions in the interbank bond market [3]. - As of August 2025, there are 1,170 foreign institutions from 80 countries and regions holding approximately 4 trillion RMB in Chinese bonds, indicating a growing demand for liquidity management through bond repurchase [2]. Group 2: Operational Changes - The new operational model will align with international practices by allowing the transfer and usability of the underlying bonds in repurchase agreements, which is expected to enhance overall market liquidity [4]. - A transitional period of 12 months will be provided for institutions already engaged in bond repurchase transactions to adapt to the new model [5]. Group 3: Risk Management and Regulatory Compliance - The measures emphasize a balance between openness and security, with a focus on transaction, custody, settlement, and exchange rate management to ensure a closed-loop fund management system [5]. - Foreign institutional investors must comply with existing regulations regarding fund and account management when conducting transactions in the interbank bond market [6].

Core Insights - China's bond market has reached a total scale of 183 trillion yuan, ranking second in the world, with significant foreign institutional investment trends emerging amid increased international financial market volatility [1][3]. Group 1: Market Size and Foreign Participation - The total scale of China's bond market is 183 trillion yuan, making it the second largest globally [1][3]. - Over 1,160 foreign institutions from more than 70 countries and regions have entered China's bond market, with foreign holdings amounting to 4.5 trillion yuan, an increase of over 270 billion yuan since the end of 2024 [3]. Group 2: Inclusion in International Indices - Since 2019, China's bonds have been included in major international bond indices such as Bloomberg Barclays, JPMorgan, and FTSE Russell, with increasing weight: - Chinese government and policy financial bonds now hold a weight of 9.7% in the Bloomberg Global Aggregate Index, up 3.7 percentage points from four years ago, surpassing Japan to rank third globally [5]. - Chinese government bonds have a weight of 10% in the JPMorgan Emerging Market Government Bond Index, the largest for any country [5]. - The weight in the FTSE Russell Bond Index has also reached 10%, double the initial estimate [5]. Group 3: Investment Appeal and Future Outlook - China's bond market is attractive due to its actual yield and safe-haven attributes, with stable returns and low price volatility amid a recovering macroeconomic environment [7]. - The People's Bank of China is committed to further opening the bond market, enhancing the investment environment, and attracting more foreign investors, particularly long-term investors [7].