BOND MARKETS

Development and Prospects of Chinese Corporate Bond Market

Development and Prospects of Chinese Corporate Bond Market

Introduction

The bond market of China is in a emergent stage. The government of the Peoples Republic of China is endeavoring to make the local bond market as one of the leading markets in Asia as soon as possible. The development and growth of the bond market is also critical for the growth of the country. The government regularly needs funding to finance its infrastructure development projects which tends to inculcate plants, electricity, roads and ports which in turn support the general level of economic development in the country. Not only infrastructural development projects intends to sustain the economic growth, but they are also considered crucial in regard to providing employment to the citizens.

Presently, vast quantities of Chinese companies are depending on the stock market and banks for finance to fulfill their operational and capital expenditure requirements. The government is endeavoring its best to support and promote the trend of corporate bond issuance which in turn culminates in to availability of long term funding. Consequently, it will provide the necessary depth to the bond market in China. Simultaneously, the private companies can expand their mechanism of self financing through corporate bonds. The rules and regulation concerning the bond market, presented some obstructions in the growth of the market. But presently the government has commenced a number of new regulations since the government has also sensed that the capital market of China cannot expand further in absence of a stable bond market. So with the necessary modifications in the Chineese bond market, the government was expecting to raise 160 billion Yuan in 2007 through the corporate bonds (Gyntelberg et al, 2005).

Discussion

A corporate bond is an important ingredient of the securities market in China, which has been an important source of financing for countless corporations in the country. Taking into account the historical changes in the discourse of bond market, the use of the term rate, recommencement of China's capital market promoted growth and acted as a breakthrough in the structure. The sustainable development of capital markets must be the one to optimize the structure of the market, a focus of which is to vigorously develop China's corporate bond market. This is also related to the question of the rationalization of the company's capital structure. Chinese corporate bonds is the basis of what kind of a face is required for the system and market mechanisms to establish and nurture in order to achieve the ultimate purpose of prompting the development of the bond market (Aziz & Christoph, 2002).

China's corporate bond market leads to many the corporate finance issues for the country

The origin and category

In the year 1984, the Chinese Government resumed the issue of government bonds, three years after the first schmene of national credit, began to expand the autonomy of enterprises. Which choose the initiative of the sources of capital supply that it must expand.Moreover, it combined unified revenue and expenditure, inculcating unified financial ...