During the 14th Five-Year Plan period, the People’s Bank of China (PBOC) has earnestly implemented the decisions and arrangements made by the Communist Party of China Central Committee and the State Council. The building of a modern financial market system with Chinese characteristics has gathered pace. At the same time, the reform and opening-up of China’s financial markets have achieved a succession of new breakthroughs. Both the width and depth of the markets, such as the bond market, the money market, and the bill market, have been improved; the support provided for the real economy is becoming better targeted; rules-based regulation has worked out in synergy with risk prevention; and high-standard opening-up is steadily moving ahead. In a recent interview with Financial News, the head of the PBOC’s Financial Market Department talked about financial market development in the 14th Five-Year Plan period in terms of key measures, achievements, and future directions.

Financial News: What measures have been adopted by the PBOC to improve the financial market system during the 14th Five-Year Plan period? What progress has been delivered?

Head of PBOC Financial Market Department: During the 14th Five-Year Plan period, the PBOC has remained committed to market-oriented, law-based, and internationally-oriented reform efforts to enhance the financial market system. As a result, financial markets, such as the bond market, the money market, the bill market, the derivatives market, and the gold market, have become wider and deeper, while the infrastructure system has seen further improvements.

First, the multi-tiered financial market system has been improved continuously. The bond market has grown into an open, inclusive, and dynamic system with a complete range of functions. Its multi-tiered framework has been basically established. The money market, with a relatively mature system of instruments and a comprehensive system of interest rates, has provided strong support for macro regulation and policy transmission. Derivatives, such as interbank interest rate derivatives and credit derivatives, have seen steady development, with the risk prevention measures, such as centralized clearing and trade reporting, further strengthened and the roles of derivatives in risk management gradually coming into play. In the bill market, innovative steps have been taken to advance well-regulated development of supply chain bills and to continue stepping up support for the financing needs of micro, small, and medium-sized enterprises. The gold market has witnessed the formation of a market pattern where the exchange gold market and the over-the-counter gold business of financial institutions are undergoing coordinated development to contribute to the market growth.

Second, China’s financial markets have seen steady improvements in their depth, resilience, and liquidity. During the 14th Five-Year Plan period, investors in China’s financial markets have become more and more diversified; the issuance, trading, and settlement systems as well as brokerage and market-making services have been further improved; and the trading instruments have been increasing to include repos, centralized bond lending, standard interest rate swaps, etc. With these improvements, trading activity and resilience in China’s financial markets have been further enhanced. Cash bond trading in the bond market, bond repos and interbank lending, and derivatives trading in the interbank market have registered turnovers of RMB1,611.8 trillion, RMB9,555.3 trillion, and approximately RMB152 trillion, increasing by 102.7 percent, 86.8 percent, and 79.9 percent, respectively, as compared with the 13th Five-Year Plan period.

Third, the development of financial infrastructures has proceeded in a coordinated manner. With the introduction of the Measures for the Supervision and Management of Financial Infrastructures, the PBOC has strengthened the routine oversight so that a financial infrastructure regulatory system has come into shape. In an effort to push ahead with the building of a unified national market, we have continued to enhance the connectivity among bond market infrastructures and duly implemented the Securities, Funds, and Insurance Companies Swap Facility. These measures are aimed at facilitating the free flow of factors in the market. In addition, we have worked on the establishment of the financial market trade repository to centrally collect data on interbank market trading, custody, and settlement so as to serve the needs of financial macro regulation and financial market regulation.

Financial News: It is set out in the Outline of the 14th Five-Year Plan that institutional building be carried out in the financial sector to provide effective support for the real economy. So what achievements have been made in China’s financial markets to provide support for the real economy?

Head of PBOC Financial Market Department: Providing financial support for the real economy has always been the fundamental objective of the PBOC. Accordingly, we have worked to steadily expand the financing scale of financial markets and optimize the financing structure, so that the functions of financial markets have better come into play.

First, the bond market has seen a steady expansion of its financing scale, leading to a significant increase in the share of direct financing. As of end-August 2025, outstanding bonds held in custody in China’s bond market amounted to RMB192 trillion, ranking second globally and marking an increase of 64.2 percent from end-2020. Corporate credit bonds, with its outstanding amount standing at RMB34.1 trillion, have become a financing channel second only to credit loans for enterprises. During the 14th Five-Year Plan period, the net amount of bond financing in China has reached RMB55.7 trillion, accounting for 35.3 percent of the increase in aggregate financing and providing strong support for the growth of the real economy.

Second, the financing structure has been optimized to channel more financial resources to key sectors. Five months after the introduction of the “sci-tech board” in the bond market, RMB670 billion of sci-tech innovation bonds have been issued in the interbank market by approximately 280 entities. What’s more, during the 14th Five-Year Plan period, China’s annual issuance of green bonds, consistently above RMB600 billion, has ranked among the top three in the world. Upholding the “two unwavering commitments”, we have made effective use of the instrument supporting bond financing of private enterprises to intensify the support for their bond issuance.

Third, in synergy with fiscal policies, financing via treasury bonds and local government bonds has maintained rapid growth. As of end-August 2025, government bonds recorded an outstanding amount of RMB91.5 trillion, rising by RMB45.8 trillion from end-2020 at an average annual rate of 16.1 percent. Specifically, local government bonds outstanding registered RMB53 trillion, representing an increase of RMB27.6 trillion from end-2020 and posting an average annual rate of 17 percent to be the largest bond type in the market. During the 14th Five-Year Plan period, RMB50.1 trillion of treasury bonds and RMB41.6 trillion of local government bonds have been issued, expanding by RMB31.7 trillion and RMB17.7 trillion, respectively, as compared with the 13th Five-Year Plan period.

Fourth, the mobilization of the resources of financial institutions has helped enhance the ability to support the real economy. As of end-August 2025, financial bonds recorded an outstanding amount of RMB43.9 trillion, of which RMB27.6 trillion was policy bank bonds, having effectively leveraged the role of policy finance in the conduct of counter-cyclical adjustments. Capital bonds outstanding totaled RMB7.9 trillion, which raised the overall capital adequacy ratio of commercial banks by about 3.1 percentage points. Since 2021, RMB3.2 trillion of financial bonds have been issued to provide targeted support for sci-tech innovation, green development, micro and small businesses, as well as the agricultural sector, rural areas, and farmers, while RMB2 trillion of credit asset-backed securities have been issued in the interbank market.

Financial News: What efforts have been made by the PBOC during the 14th Five-Year Plan period to advance financial market institutional building and strengthen regulation?

Head of PBOC Financial Market Department: The Central Financial Work Conference emphasized the need to strengthen market rules and to build a financial market with unified rules and coordinated regulation. During the 14th Five-Year Plan period, the PBOC has worked with relevant agencies to move faster in improving financial market rules and regulations while strengthening risk monitoring and regulatory enforcement.

First, we have strengthened the coordination of market rules and unified the basic regulations for corporate bonds. Through the inter-agency coordination mechanism for corporate credit bonds, we have worked with relevant agencies to better coordinate the planning and regulation of the bond market. With the formulation of the Guidelines on Advancing Reform, Opening-Up, and High-Quality Development of the Corporate Credit Bond Market and in line with the principle of category-based convergence, we have unified the basic rules and regulations for corporate credit bonds regarding information disclosure, default handling, and credit rating so as to improve market transparency and the ability of risk disclosure.

Second, we have strengthened institutional building to promote well-regulated development of financial markets. Working to optimize the pricing mechanism of financial markets, we have improved the rules on bond underwriting, valuation, brokerage, and market-making and further brought into play the role of treasury bond yield curves as pricing benchmarks. We have enhanced institutional development of the money market to establish a framework centered on liquidity management capacity. Moreover, the new rules on commercial draft acceptance and discount have been put into effect. We have also reinforced the prevention of risks associated with electronic certification of accounts receivable and brought the business under better regulation. Meanwhile, we have regulated the development of the gold leasing business. And our efforts have contributed to the stipulation of the single agreement and close-out netting arrangements in the Futures and Derivatives Law of the People’s Republic of China so as to consolidate the legal basis for the development of the derivatives market.

Third, we have strengthened risk prevention and regulatory enforcement to safeguard the safe and stable operation of financial markets. The PBOC has worked on establishing and improving the macroprudential management framework that covers all the financial sub-markets and cross-market areas as well. We have also improved the contingency arrangements for risk handling, enhanced the functioning of the trade repository and other financial infrastructures, and continued to strengthen risk monitoring and early warning for the bond market. As a result, the bond default rates remain low and the markets have operated stably in an orderly manner. Moreover, we have promoted effective link-up between self-regulation, administrative oversight, and unified law enforcement in the interbank market to ensure zero-tolerance towards illegal and irregular behaviors.

Financial News: Given the requirement laid out in the Outline of the 14th Five-Year Plan for developing new institutions for a higher-standard open economy, what efforts have been made by the PBOC to advance high-standard opening-up of financial markets?

Head of PBOC Financial Market Department: The PBOC has worked with other financial regulators to advance high-standard opening-up of the financial services sector and financial markets. We have expanded financial market connectivity, optimized the arrangements for the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect, and Swap Connect, and made it more convenient for overseas investors to invest in China’s financial markets so as to enhance financial market internationalization.

First, connectivity with international financial markets has been deepened. We have launched the Swap Connect, improved the Bond Connect Scheme, and introduced the offshore bond repo business, so that investors at home and abroad can easily access, via Hong Kong, China’s bond market and financial derivatives market. As of end-August 2025, there were nearly 1,170 overseas investors in China’s bond market, who come from about 80 countries and regions around the world. Their holdings totaled approximately RMB3.9 trillion, almost five times that before the launch of the Bond Connect. Of the top 100 asset management institutions worldwide, 80 plus have entered China’s bond market.

Second, we have steadily expanded institutional opening-up to improve the investment environment for overseas institutions. We have moved ahead with the alignment of financial market rules and regulations with international standards, such as those on issuance, trading, registration, settlement, taxation, rating, and risk resolution, in order to enhance the internationalization of China’s financial markets. With increasingly larger weights in the three major global bond indices, China bonds have become much more influential and competitive internationally. Moreover, in collaboration with relevant agencies, we have established a unified framework for bond market opening-up in an effort to advance the opening-up of the interbank bond market and the exchange bond market in a coordinated manner. Meanwhile, continued efforts have been made to promote the acceptance of RMB bonds as eligible collateral in global markets. We have also optimized the institutional arrangements for panda bonds, so that they have been issued by more and more entities of different types, amounting to over RMB1 trillion cumulatively. Additionally, the Shanghai Gold Exchange has launched a bullion vault and gold contracts for delivery in Hong Kong. Furthermore, the development of free trade zone offshore bonds is moving ahead in line with international rules and standards as well as the principle that both the issuers of such bonds and the investment funds come from overseas.

Third, we have worked to coordinate opening-up and security to firmly defend the bottom line of financial security in an open environment. Attaching great importance to balancing risk prevention and control capabilities with the advancement of high-standard financial opening-up, we have put efforts into developing a system of financial regulation and risk prevention, adapted to the needs of high-standard opening-up. Currently, China has had a complete system of financial market infrastructures. What’s more, continuous improvements have been made to financial market laws and regulations, to market resilience and risk prevention capacity, and to the macroprudential management framework for cross-border capital flows, providing strong safeguards for the safe and stable operation of financial markets in an open environment.

Moving forward, the PBOC will further ramp up efforts to develop financial markets and the supporting infrastructures, deepen high-standard opening-up of financial markets, and accelerate steps to build a modern financial market system that is highly adaptable, competitive, and inclusive, thereby providing better support for high-quality development and the pursuit of Chinese modernization.