Studies On Efficiency Of Primary Market Of China Treasury Bond

With the reform of the financial system, the government bond has become the important means for the People's Bank of China to make open market operation ,implement the national monetary policies and make macro-control. Thus it is of great importance to improve the efficiency of the government bond, in particular the primary market.In this paper, based on professors of Chicago University, West and Tinic's theory of internal and external efficiency of capital market, the efficiency of china government bond's primary market is analyzed from two aspects–whether the issuing information of government bond market is fully disclosed and evenly distributed, and whether there exists a reasonable price discovery mechanism in the market.During the period from the year of 1981 to the year of 1991, china government bonds were issued through administrative apportionment .Under such mechanism of planned economy, the issuing information is disclosed by the state council through annual"regulations of treasury bonds of people's republic of China", and the issuing price is determined by the state council.In the year of 1991,underwriting system began to be implemented in the issuing of government bonds ,meanwhile the primary dealers'system was introduced into China .At that time ,the issuance of government bond made a great success ,However ,because the issuing price was still determined administratively ,the underwriting system didn't achieve the function of price discovery .As china implemented the management of issuance size of treasury bonds, the Ministry of Finance can not disclose detailed issuance information at the beginning of every year; the issuance information can be disclosed only a few days in advance.Began with the year of 1993,the auction was implemented gradually in the issue of government bonds .At the same time ,the key periods government bonds issue plan ,combining with quarterly issue plan ,help investors build anticipation and get the investment bund in advance .Compared to the fixed issuance table of America ,there still remain some problems such as incomplete table ,not-fixed issue duration and changeable frequently .Currently the issue approach of government bond implemented in china is the way of auction combined with underwriting, under which way, the bidding subjects are confined to the members of primary dealers, and the bidding price range is restricted.Under these several issue ways, regarding the information disclosure, the issuing information is not disclosed fully and evenly distributed .there still exits the information asymmetry between the issuers and the investors, and there is information asymmetry among the different investors .Regarding the price discovery, the price is not determined by the supply-demand in the market.Based on the above empirical analysis ,in order to improve the efficiency of the primary market of china government bond market ,there come several suggestions such as implementing annual fixed issue table ,setting up when-issued system ,and implementing non-competitive bidding ,enhancing the participation of bidders .