Research On China’s Bond Investment And Financing Internationalization And The Financial Infrastructure Conditions

This paper analyzes the internationalization of bond investment and financing.According to the classification method of the primary＆ secondary bond market,and the cross-border investment ＆ financing behaviors of ‘bringing in’ and ‘going out’,this paper establishes the ‘Four Dimension Framework’: international issuers issue bonds in the domestic bond market,international investors trade bonds in the domestic bond market,domestic issuers issue bonds in the overseas bond market,and domestic investors trade bonds in the overseas bond market.Then,the research on RMB international bond,the opening-up of China’s bond market,and China’s offshore dollar bond market are included in this ‘Four Dimension Framework’.Moreover,the financial infrastructure conditions are also studied.Based on the ‘Four Dimension Framework’,this paper focuses on two of them.Firstly,international investors trade bonds in the domestic bond market dimension,this paper analyzes status quo and problems of the opening-up of China’s bond market,sorts out the policy evolution,make the comparative analysis of the main modes of international investors’ investment in China’s bond market,and put forward the existing practical problems.Based on the quarterly data of 12 developed markets and 7 emerging and developing markets from2001 to 2018,use the Driscoll-Kraay Fixed-Effects panel model to analyze the influence of international investors on the domestic bond market.Empirical analysis shows an increase in the proportion of foreign investors holding ratio of the country’s government bonds helps to reduce the country’s government bond yield.Secondly,domestic issuers issue bonds in the overseas bond market dimension,systematically research the development context and financial infrastructure conditions of the Chinese dollar bond market and the offshore RMB bond market,and make the comparative analysis of Chinese dollar bonds,Eurodollar bonds,offshore RMB bonds,and Panda bonds,put forward the development path to realize the internationalization of bond financing in China.Lastly,the financial infrastructure conditions dimension,this paper analyzes the evolution of financial infrastructure and its measurement standards,studies the impact of financial infrastructure conditions on the financial market and the risks of financial infrastructure institutions,compares the differences between China and the United States,and comprehensively evaluates the infrastructure conditions of bond investment and financing in China.The main conclusions are: The difficulty of implementing ‘Four Dimension’ varies.The international investors are helpful to reduce the financing cost of domestic bond market.Prudently attention are needed to follow the development of Chinese dollar bond market.The foundation of internationalization of bond investment and financing lies in the comprehensive opening of financial infrastructure.On this basis,this paper puts forward the policy recommendations: straighten out the realization of the bond investment and financing internationalization path,deepen the ‘Elements Flow Opening up’ to the ‘Financial Infrastructure Conditions Opening up’,actively promote the Dollar-Bond Financing to the Local Currency Bond Financing,and promote the development of internationalization of financial infrastructure institutions.