15 January 2019

China bond market to double in five years, PwC says

China is likely to see its bond market double in five years thanks to market reform, PricewaterhouseCoopers (PwC) said in a survey.

The survey polled 1,604 Chinese bankers and 37 senior executives of foreign banks in the mainland.

Banks should improve their liquidity and risk management in the upcoming deregulation and interest rate liberalization, William Yung, financial services advisory partner in PwC’s China division, told a Hong Kong media briefing on Tuesday. 

These reforms will squeeze their net interest margins and accelerate capital flow, he said. 

Participants in the survey said they will develop more fee-based new products in wealth and cash management, improve their asset liability management (ALM) and focus more on promising small businesses.

Foreign banks enjoy an advantage over domestic banks with their stronger ALM capability, Yung said.

About 60 percent of Chinese bankers expect the overall non-performing loan ratio to increase compared with less than 50 percent a year ago.

Meanwhile, foreign banking executives remain optimistic about China’s long-term growth prospects but a small number are skeptical about financial reform. 

– Contact HKEJ at [email protected]



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