Market Summary

Yield Movements

The yield curve for local currency (LCY) bonds in the People's Republic of China (PRC) shifted downward for most maturities over lingering concerns about a weakening domestic economy despite the imposition of a 90-day tariff pause between the United States and the PRC. On average, bond yields fell 3 basis points across the curve from 3 March to 30 May over heightened economic uncertainties.

Local Currency Bond Market Size and Issuance

Growth in LCY bonds outstanding in the PRC slowed in Q1 2025, with the market reaching a size of CNY159.7 trillion at the end of March. LCY bonds grew 3.0% quarter-on-quarter (q-o-q) in the first quarter (Q1) of 2025, down from 3.6% q-o-q in the prior quarter. Both the government and corporate bond segments posted moderating growth in Q1 2025. The PRC's bond issuance contracted 0.6% q-o-q in Q1 2025, falling to CNY12.0 trillion. The decline in quarterly issuance was driven by the reduced issuance of corporate bonds, which fell 9.9% q-o-q to CNY4.6 trillion.

Sustainable Bond Market

The PRC's sustainable bond market remains mostly composed of green bond instruments and private sector financing. The PRC has the largest sustainable bond market in emerging East Asia, which reached a size of USD367.4 billion and comprised 53.0% of the regional total at the end of March. A majority of the PRC's sustainable bonds are green bonds, with a share of 87.2% while private corporations are the most common issuer accounting for 93.6%.