This is the first of a series of my academic reports and papers originally written in the process of pursuing an MSc in Banking and Finance. This particular report – titled “Development Needs of China’s Capital Markets” – was submitted at the 26th of December 2013 as a term paper for a course in China’s political and economic development, covering events from the Communist revolution and onwards. The principal focus of the paper is the potential for opening of China’s capital markets with the specific target being an openly and freely traded currency, and what political and economic reform areas are needed to reach that stage.
Updates to this paper have not been done in the writing, and that is why you will see footnote markers intact (with the footnotes at the bottom) and things that are not edited as news have came in. Changing the footnote format of this would have required too much rewriting, and therefore I think it’s better to retain the original writing of the paper. Things have been formatted and edited to allow for a better reading experience on the blog. Illustrations will potentially be added to highlight some of the points, otherwise I might just hold these back and do a writeup on one of the presentations I did in a group project for China’s road map to 2030. It will probably become evident with time.
The paper is organized as follows:
a) Current Capital Market Features
b) Points of Comparison Between Capital Market Components and Chinese-to-Global Features
III. Setting Goals for Future Capital Market Development in China
IV. Political Constraints and Conflicts of Interest
V. Employment of Off-Shore Financial Centres
Development Needs of China’s Capital Markets
To avoid falling in the “middle income trap” of failing to progress above a GDP per capita of roughly US$15000, China will need to overcome many challenges going forwards and will almost certainly require a reorganization of the economy of similar magnitude to that following Deng Xiaoping’s control of power in 1978. While the politics surrounding any future transition will (hopefully) be nowhere near as tumultuous, there is a high risk that the economic and financial structures of China will be all the more shaken. Capital needs to be allowed and encouraged to flow to smaller businesses to encourage new ideas to be capitalized on, while new savings mechanisms beyond the stock or property markets need to be developed (besides cash), to minimize the sensitivity of property- and stock prices to growth. In dealing with almost any problem in China, it is important to recognize that many of the aspects of the economic and political system interact in every given issue, and this paper aims to develop an understanding of the issues surrounding the further opening of the Chinese capital markets. Additionally, the ambition is to develop a possible road map for further opening and which goals should be targeted.
China has opened up tremendously after Mao Zedong’s death, and every successive leader has been able to shape economic development very strongly. Deng Xiaoping let the very opening and introduction and integration of capitalist ideas into the Chinese socialist political system, while Jiang Zemin built on this with opening up of stock exchanges and broadening trade ties abroad while attempting to rekindle communist ideals internally in China. Hu Jintao on the other hand, is seen as having had difficulties consolidating powers underneath him internally in the Chinese Communist Party, and thus was unable to drive the economy as strongly as many would perhaps have wished. Still, one needs to view this in the perspective that China had near unbroken growth during the 2008 Great Financial Crisis under Hu and that being thanks to an (GDP-adjusted) enormous stimulus program being passed very quickly in China, and that there was a massive banking restructuring taking place in 2005 which paved the way for strengthening and extending the a renminbi yuan bond market. Currently, Xi Jinping has seemed to structure power around him very effectively and shown great reform-mindedness during the recently concluded third plenary session of the Communist Party of China’s Central Committee, during which matters of economic development were dealt with.
In going forwards and estimating how the capital markets will develop, the reform needs of China – as viewed internally – have been adopted from the Development Research Council and World Bank’s joint report China 2030. Furthermore a qualitative comparison to the state of the different individual capital markets in developed economies will be done, in an attempt to identify potential goals and ambitions in the interim for China.
II a) Current Capital Market Features:
The Chinese capital markets are largely dominated by banks, who by fiat are the sole actors in over 80% of all secondary market trading occurring in China today, and large players in both the equity market and exchange traded bond markets where other actors are allowed. This is in very sharp contrast to developed markets where the largest market participants are typically pension funds and insurance companies. A more detailed comparison to the UK, US, Japan and Taiwan data will be made (to estimate what China needs to attain to liberalize currency exchange further) under the heading Stabilizing the Currency Market. Interest rates are set by the People’s Bank of China (PBoC) which is not independent from the government, and this control extends to the bank lending and deposit rates, at 6% and 3% for around two years respectively. Given that inflation often goes above 3% there has been little real incentive to save, but given the lack of capital market investment alternatives in China, there still has been an accumulation of 102.7 trillion RMB (US$16.9 trillion!) in deposits. One of the primary reasons that capital market liberalization needs to accelerate is that without sufficiently deep and liquid capital markets that can absorb capital inflows, there is a strong risk that the RMB will rise wildly and disturb trade. China’s trade surplus is in excess of US$120 billion annually, and more importantly it might lead to bankruptcies and layoffs while the economy is generally growing which would fuel social unrest in China.
- Stock Markets
The Chinese stock market is fairly fragmented in that independent trading is conducted on three different exchanges – the Shanghai Stock Exchange, the Shenzhen Stock Exchange and finally also on the Hong Kong Stock Exchange. Disregarding the Hong Kong Stock Exchange given its nature of multinational listings and that the regulatory and political situation of its operation is not influenced by the CCP, the Shanghai Stock Exchange is the largest in China, with a market capitalization in 2012 of US$2.547 trillion, making it the 7th largest exchange in the world. In addition the Shenzhen Stock Exchange has a market capitalization of US$1.150 trillion making the mainland bourses collect a total capitalization representing 21.8% of Asian equity market capitalizations in 2012.
- Bond markets
As of 2012, China’s bond markets are the fourth largest in the world, at a valuation of 21.73 trillion renminbi, or roughly US$3.579 trillion. The Chinese bond market is split up into two separate markets: the inter-bank market and the exchange traded market, with over 95% of the total market turnover represented by the inter-bank market. Total trading volume for 2012 was registered around US$ 35 trillion, implying that liquidity is very good.
The actors in the Chinese bond market are generally classified in four major categories: central bank short-term notes, government/Ministry of Finance bonds, financial institution bonds and non-financial corporate bonds. The primary component of financial institution bonds is the Policy Bank bonds which are issued by the China Development Bank, Export-Import Bank of China, and Agriculture Development Bank of China. These banks issue bonds to back up the financing of the policy ambitions of the CCP, such as infrastructure bonds, bonds to raise capital to allow trade financing, and other politically motivated goals. Policy Bank loans alone had accumulated bond issuance of 7.587 trillion RMB, as a group second only in issuance to the Ministry of Finance at 7.810 trillion RMB. Non-financial corporate bonds can largely be separated into two large groupings: enterprise bonds and normal corporate bonds. Enterprise bonds differ in that they are issued by major state-owned-or-backed enterprises under particularly good terms for projects in the national interest of the PRC and subject to a quota, whereas the remainder of the companies’ issued debt would be classified as normal corporate bonds. Additionally, enterprise bonds are both traded on the inter-bank market and the open exchange market, whereas the normal corporate bonds can only be traded on the exchange traded market. Enterprise bonds in issue are valued at 1.934 trillion RMB, while the other corporate bonds have a relatively miniscule market value of 548 billion RMB.
Recent developments in the Chinese bond market include the approval for China Development Bank to issue bonds on the exchange traded market, where financial institutions have previously been restricted from selling debt. This is an incredibly important step in the further market liberalization, as it allows more liquidity to flow to the exchanges and allows a wider variety and safer type of bonds to be adopted by non-bank organizations.
- Stability of the Currency Markets
The RMB is a managed currency, having a so-called “crawling peg” to a basket of currencies heavily weighted towards the US dollar, where the official currency exchange rate is adjusted daily within certain parameters. To prevent strong foreign competitive shocks due to currency fluctuations, this crawling peg together with capital controls have generally been used to shield Chinese companies from the worst currency risks. Foreigners wishing to invest in China’s domestic capital markets are largely restricted to the Qualified Foreign Institutional Investor (QFII) Programs. The standard QFII program allows firms to use foreign currency to buy Chinese capital market assets, whereas the RQFII allows them to use RMB for their investments. However, many domestic firms use large international institutions as assisting or supplementary managers by offering these foreign institutions a part of their Qualified Domestic Institutional Investor (QDII) quota. Given that this data is difficult to compare, the official QFII program will be used to estimate the capital flow contributed by the capital market at present. As of August 2013, the total quota of the QFII program stands at US$150 billion, out of which US$46.4 billion has been allocated and approved for use by foreign financial firms while the RQFII pilot program total quota currently stands at 270 billion RMB and is intended to be expanded to several other locations such as Taiwan, Singapore and London, in addition to Hong Kong. The maximum current QFII quotas thus have a total of 911 + 270 billion RMB or 1181 billion RMB, stacked up against a total 2012 market capitalization of the mainland bond and equity markets of 25.43 trillion renminbi and thus representing 4.64% of the capital market in total. This percentage is much too high to describe the current situation since QFII holdings can be invested in other capital market products (such as private equity products) and the maximum of the quota allowed is used, rather than the actual quota applicable. Most likely, the true effect of the QFII programs currently will fall somewhere roughly one-third to one fifth of the estimated value, thus somewhere between 1.5% and 1% of total Chinese capital market capitalization.Using 2010 data, the US and Japan had total capital markets valued at roughly 460% of GDP, other developed markets slightly shy of 400% of GDP, while in China it stood at roughly 280% of GDP. One particular feature of the Chinese capital market is that it is done in non-securitized lending, indicating that loans go from bank to lender in one line and that risk is concentrated on the one making the loans.
II b) Points of Comparison Between Capital Market Components and Chinese-to-Global Features:
To emphasize the size differential of the capital markets, converting the 2010 GDP fractions into actual currency can be helpful. US GDP was at US$13.898 trillion, China US$4.990 trillion, Japan US$5.040 trillion and Germany US$3.299 trillion. This implies that US capital markets were pricing US$63.93 trillion of assets, Japanese markets US$23.18 trillion, Chinese markets US$13.97 trillion and German markets about US$13.2 trillion in 2010. Now, it is a big assumption that the structure of the capital markets has been retained in the last three to four years, particularly in China (where GDP has grown by over 60% since and the stock market capitalization has remained somewhat stagnant) but the data allows certain insights to be gleamed nonetheless. Comparing with trade finance and total capital market capitalization in large economies, one can attain a basis for qualitative understanding of the Chinese capital market requirements, which likely needs to be scaled up given the relatively large share of trade and its benefits to the Chinese economy. The 2011 value of Chinese total trade was US$3.867 trillion, second only to the United States’ US$3.883 trillion. Japan had US$1.685 trillion and Germany US$2.576 trillion equivalent trade. Plugging these data straight into the use of 2010 capital market size, the US capital markets were 16.46 times the size of their traded goods value, Japan had a ratio of 13.76, while China had a value of 3.59times and Germany getting a multiple of 5.12 times traded goods. One explanation for Germany’s lower value compared to other developed economies would obviously be the adoption of the euro currency, meaning higher stability of the currency and more access to trade on favorable terms. Still, China has a lower ratio at 3.59, obviously slightly depressed given one year of growth unaccounted for, implying that the value is probably better estimated at around 4 rather than 3.6. This is still very far behind both the US and Japan, and would likely almost double if deposits could be employed in the capital markets by conversion from cash savings to pension fund- and insurance savings.
In 2012, the 13 most notable pension markets had an average of 78% of national GDP (asset fraction unweighted by GDP) in pension fund assets. At the same time, in aggregate the funds in these 13 markets held 33% in bond assets and 47% in equity. The primary concern from a financial perspective for these market participants is to ensure a stable stream of cash flows to their pension beneficiaries, and this is often primarily achieved with bonds and stable dividend-paying stocks. Given that deposits of household cash of 43 trillion RMB to serve this purpose, it is plausible that a very sizeable market for Chinese pensions could very easily develop if there is the capital market outlet for pension funds to have investable target assets. For this to happen, pension funds need to have access to a very sizeable portion of the bond market, which would require a large share of the bond market to move from the inter-bank market to the exchange traded market.
In summary, the capital markets in China has large domestic capital pools to draw on for further deepening in the form of deposits, which to 42% are held by individuals with the remaining 58% likely to be held in treasuries of large companies with few investable assets, unspent given that they are waiting to invest and not deployed in a negative real interest rate environment.
III. Setting Goals for Future Capital Market Development in China:
In developing the capital markets further, it will be important to look at the specific needs of the Chinese market and the political problems inherent in capital market reforms. The principal needs here are to make certain that the market depth of available capital is big enough that the issuance of new oncoming debt will go smoothly. Failed issuances can create negative feedback loops where there is the problem of the price of bonds being driven down, meaning that old issuance either needs to be paid for in cash as it comes due or refinanced at unrealistically expensive rates. The prohibitively expensive rates in turn means that the financial position of the issuer fundamentally gets worse, and forces new bonds by the same and similar issuer but issued later to be priced higher still. Repeating these relationships would ultimately lead to defaults which would make it even worse, until either all debt which is not sustainable (at interest rates at multiples to fair interest rates) is eliminated or the government steps in to bail out companies. Ample cash thus needs to be either seeded by the government or collected very rapidly. Perhaps the greatest concern here is that the municipal and local governments would not be able to go to market. Even though the Chinese central government has a very low (26%) debt-to-GDP ratio there are major accumulations of debt in the municipal and local governments. As these local governments are not allowed to seek financing at will on a free market, there are a number of societal problems that have sprung from their drive to raise funds for future investment, including land appropriation from farmers for sale at a major profit, and use of “Special Investment Vehicles” that allow the debt to not be carried on the balance sheet of the local government. These local government debts hend in SIV’s and otherwise are officially estimated to be valued at 10.7 trillion RMB, while Xiang Huaicheng – formerly Minister of Finance – has estimated total local debt to be in excess of 20 trillion RMB. A process of encouraging these SIV’s to be brought back to the balance sheet when needs for refinancing arise needs to be devised, also hopefully with the side effect that farmers’ land rights can be strengthened and enforced by an entity with no economic need for said land rights. In deepening the financial markets and using financial intermediaries for pooling risk and capital, markets can be developed to cover for insurance, health care and old-age benefits and thus allow the Chinese people to take more risk, as well as becoming more socially mobile. These increases in risk willingness and security will thus allow China to accelerate reforms towards a more dynamic economy. Finally, the market size needs to be significant enough that it can support further internationalization of the Chinese yuan without causing disruptive currency changes or requiring retraction of the currency opening policy. Doing this will be much easier if the level of assets traded and priced on the capital markets in China is not the sole determinant of the net change on prices, but one factor in a bigger financial structure. If “simple” derivatives such as options, futures and forwards are used, the readjustment needs for larger investors will decrease, vastly reducing the volatility swings in the market as larger investors do not need to unwind the underlying after a mistaken positioning. Interim capital market development goals can thus be constructed along the following lines:
- Market depth should be sufficient to allow pension funds to expand X trillion RMB per year/multi-year period.
- Transfer of debts from the Special Investment Vehicles to the local or central government balance sheets (potentially secured through debt issued by the Ministry of Finance) ought not to be subject to failed issuance.
- Build capital markets of sufficient size that they will influence the Chinese yuan currency cross rates rather than vice versa, requiring a total capital market capitalization of 8-10 times the Chinese international trade by 2020 with continued growth thereafter.
- Build a derivative market that can easily be used to buy and sell risk for most exchange traded products. The goal is to allow hedging, speculation and the ability to support growth and analysis of the underlying contracts.
Some problems were already present as of 2011, when the total paid-in contributions to pension plans were 2.5 trillion RMB, with only about 300 billion RMB in funded, locked accounts. The remainder was supposedly locked but has been used to fund pensions for retirees whom had not paid into the system. Still, those sums are relatively minor in relation to for example personal deposits.
IV. Political Constraints and Conflicts of Interest:
Perhaps the major question of capital market reform will be posed by the political will available for undertaking such an endeavor. Currently Xi Jinping does seem to have consolidated his powers and driven them further along the lines of Princeling faction political alignment and insisting on economic reform. His challenges in doing so will be several. First and foremost, the state role in the economy has led to strong connections between the government, particularly on a lower level, and the private sector. Involving the state-owned enterprises in this analysis and broadening the view to their procurement and sales channels, many options exist for making illicit gains given sufficient connections and a leadership position within the CPC. The corruption problem creates two interplaying dynamics for corporate bond funding. First, politicians eager to maintain good connections and accept bribes from companies, or whose friends or future potential employer represents a state-owned enterprise, wants to ensure that their business conditions are as good as can be. Said politician will thus work towards directing capital to favorite firms by the means available to him in the regulatory framework. Second, given a fixed interest rate environment, a bank making a loan wants to minimize the risk it assumes. Adding the potential for good connections with a related state-owned enterprise and improved profitability and career prospects for the client manager at the bank, there is very little incentive to arrange finance for individuals or smaller businesses. The current system of a very good net interest margin funded below the inflation rate is an amazing opportunity for any bank, and has been a contributing factor to the current financial strength of China’s banks. Ultimately, both of these factors will work together to hamper the true source of capital: deposits. If large sums of loans have already been made to politically connected companies or other market participants, they will protest wildly any means to divert deposits away from themselves, most likely backed up by the banks themselves. A freer interest rate regime is likely needed to at least give banks the financial incentive to supply loans to smaller market actors. Positive signals have been coming out of Beijing, especially with respect to the clampdown on political representation extravagance and restricting superfluous ordering of expensive foods and liquor by government officials. Another signal is the tendency for restraining operations of liquidity that have occurred in Chinese interbank markets since the summer of 2013, with repurchase agreements (repos) being done while reverse repos were not used. Repos remove liquidity from the market in the short term while reverse repos adds liquidity, and they are the main short term money market control tool of the PBoC. By showing that the liquidity will not materialize as soon as it is asked for, the PBoC created the impression in the market that bank management needs to be alert and move faster towards interest rate reform readiness.
Politically, reforming the structure of local government balance sheets and unearthing all the potential bad loans is another undertaking that will require a strong political will to drive change. Many current politicians are unlikely to let a crisis occur on their watch given the strict CPC hierarchies and emphasis on personal success within the party or government to build relationships. Former politicians are also not keen to see the cadres trained under them and now in power positions thrown into a challenging situation, since this diminishes their own influence and advantages conferred through political service. Political capital from Xi Jinping himself and his allies in the Politburo will likely be needed to enact policies that reward bringing unaccounted-for debt into the open as well as punishing those that have held office during periods of irresponsible local debt accumulation. Driving the policy of trying to rein in local government debt while potentially having to expand the central government balance sheet to cushion a period of reforms will likely be a hard bargain. It will not necessarily be on the overall level, but local officials will be pressured to ask for wider disbursements and strongly reject every suggestion of budgetary discipline to allow themselves the better chance to invest in their home areas.
Potentially most directly politically problematic is the implication that for a capital market opening to work in full, incentives need to exist for people to actually feed capital into the capital system. There needs to be a functioning- or very well guaranteed program in place to fund into, with tangible benefits to almost all involved parties. The problem with this, as was illustrated with the pension fund system, is that these systems need to be large, probably to the pain limit of what “gradualism” can accept. If the financial pool does not end up large enough to handle volatility, and the systems in place for it are possible to abuse or circumvent then it is unlikely that any insurance or pension fund will reach critical mass and be of good economic value to the clients and reduce risks and costs compared to the bank deposit alternative. A program at 2.5 trillion RMB can likely never function and likely needs at least 10 trillion in pension capital to fully function in a country as large as China.
V. Employment of Offshore Financial Centers:
For developing the first pilot projects – and using them as a benchmark for financial institutions still learning pricing, market making and underwriting – smaller offshore financial centers can be tremendously useful. China is currently in the position that it can use several nearby financial centers such as Hong Kong and Singapore, flush with talent possessing the best ability to understand China that is accessible outside the mainland. However, there might be several problems in launching large-scale policy pushes at these places, given their relative difference to the local Chinese market with respect to regulations and business practices. The recommendation here is most likely to use these areas as identifiers of what is possible, and the market acceptance and pricing of products that would be novel in China.
Hong Kong obviously serves as the main financial hub and testing spot partially because of its legal regulations following British rule, and partially because of the human capital accumulated in the city. Additionally being a part of China legally and culturally at least to a higher degree than other offshore alternatives will likely give Hong Kong a good edge up in the ability to act as a continued financial services hub. Even though it will be facing competition from Shanghai (especially after the opening of the Free Trade Zone in the fall of 2013) Hong Kong carries the advantage of being very easy to isolate from the rest of mainland China, allowing the option to abort for other reasons than an unsuccessful financial product adoption. Should a financial innovation be very popular but lead to banking system problems or unexpected lack of liquidity then there will be little problem restricting it in Hong Kong and not adopt it. Concepts launching in Shanghai virtually have to be proven given Shanghai’s greater accessibility for the rest of China’s investors. Singapore carries a number of advantages similarly to Hong Kong, but the business mix (private banking and wealth management), distance and lower ability to integrate renminbi trade finance will probably put Singapore as the second offshore center.
Taiwan has an interesting opportunity to position itself as a strong physical trading and value-adding intermediate destination for Chinese goods. Given Taiwan’s emphasis on small businesses and relatively well-developed service industry along with its growth transition success story, it should have much to offer China in terms of insights for how to build certain capital market components. The nationally mandated insurance policies and overall structure is one example of how an initial investment by the Taiwanese government has reduced future costs dramatically and increased quality of service. The culture of high savings rates in Taiwan and similar pressures on the property market should be valuable insights in the Chinese capital markets. Taiwan’s overall availability of venture capital and very structured approach to SME funding should place it as a prime example as for how to generate a wide array of small businesses that are quickly able to capitalize on their business plans. If China adopts similar methods and gains success from it, it would allow retooling of the QFII programs to shift closer to venture capital and allow importing of foreign know-how in that industry when the most common capital markets are no longer in need of a shielded environment.
Detailed discussion of how to reform the system in China to root out corruption and gain policy adherence is outside of this paper’s scope. The author recognizes that it is extremely important for the success of any reform, but the complexity of the issue and the lack of crucial available information makes this virtually impossible to tackle from the outside. For the discussion below, the reader is asked to make the unreasonable assumption that the problem is either solved or not significantly affecting performance of the suggested policies.
First and foremost, government involvement is needed to create the conditions for investors to pool money. This could be done through the Ministry of Finance issuing debt and using the proceeds to buy Special Investment Vehicle debt to be placed in an investable fund allowed to trade on the exchanges, where good assets are kept on the books and bad assets sold off at a discount. This will increase the value of SIV’s, allowing the local governments to offload them more easily, curb the refinancing needs and potentially create profits for the government units do use for developmental purposes. If this is done aggressively enough at the start, momentum could lead good assets to be valued higher than at initial purchase and lead to a profit for the central government as well.
Now, a larger pool of accessible capital is needed, and should be drawn from new deposits where possible and existing deposits when otherwise required. Given likely concentrations of deposits with larger companies and wealthier families, this is a project that can preferably be attempted in Tier 1 and potentially some Tier 2 cities in China to begin with within a 3-5 year time frame. The core of this idea is to give (very) discounted additional social security services such as healthcare coverage for a large (minimum 2-3 months of salary) shift of money into the advance paid pension system in a short time to build the capital buffers. This capital can then be freely invested in exchange traded products, but the participating banks will need to meet certain minimum quotas on their exchange traded bond issuance to remain as participating banks. This caveat is to allow further market depth to accommodate additional capital rushing into the market.
In the third phase, following a set target of assets in these pension-system driven pools, liberalization of the interest rate structure can accelerate, allowing more market-based interest rates. Following this, the price of bank loans should be set on the market and make bond issuance more attractive for larger companies and state-owned enterprises, leaving deposits to be employed in the service of small- and medium enterprises which have less access to the big structured bond market. Thus banks in the Tier 1 cities will primarily be lending to smaller firms.
Given indications of the early success of the market experience as a whole, the system can then be further expanded to other cities, with perhaps a 2-3 year lag and a given pension fund asset target between every numbered tier of cities. Assuming tax reform has taken hold in greater parts of mainland China, the system should at the first expansion stage also have the stability to accept bond issuance straight from the richer local governments and assist them in their continued growth efforts.
Assuming China’s GDP grows with 7% per year on average until 2020 and trade keeps pace (hopefully unreasonable assumption), China’s total trade value would be roughly 50% higher than today, at US$5.788 trillion. For allowing near intervention-free currency trading at this time, in the terms that other capital markets show are acceptable, China would need at least a US$46.3 trillion capital market capitalization, which would be an increase of about 85% of today’s market value assuming total capital market values are 280% of GDP in 2013. To put it in perspective, it’s an increase of 22.5% of the market capitalization-to-GDP ratio spread out over 6 years, or 3.44% per year, which is not unreasonable assuming unbroken growth. China would thus be able to liberalize the RMB much more, and enjoy the benefits of having the renminbi be an increasingly attractive reserve currency.
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 PBoC website
 PBoC data retrieved from Trading Economics, http://www.tradingeconomics.com/china/inflation-cpi
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 Data retrieved from World Federation of Exchanges Annual Statistical Query tool: http://www.world-exchanges.org/statistics/annual-query-tool
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 Goldman Sachs Asset Management, “FAQ: China’s Bond Market”
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 US$150 billion at 25/12 2013 exchange rate.
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