China Considers Doubling Investment Channel for Overseas Bonds

(Reuters) – China is considering doubling an investment channel local investors use to buy bonds overseas, Bloomberg News reported on Monday, citing people familiar with the matter.

Regulators have held early talks about expanding the “Southbound” leg of its Bond Connect channel to as much as 1 trillion yuan ($139.41 billion), the report added, citing unnamed sources.

Bloomberg said that no final decisions have yet been made and any eventual plan would need approval from relevant regulators.

Under the expansion plan, non-bank financial institutions would be granted access to the trading link for the first time, with an annual investment quota of up to 500 billion yuan.

Through this change, Chinese onshore institutions would gain greater access to foreign bonds available on the Hong Kong Stock Exchange, including dollar-denominated ones.

The country’s biggest mutual funds would be among the firms eligible for the new quota, the Bloomberg report said, adding that no final decisions have been made and any eventual plan would need approval from relevant regulators.

Reuters could not immediately verify the report.

The Hong Kong Monetary Authority and Hong Kong Stock Exchange declined to comment. The People’s Bank of China did not respond to a Reuters request for comment outside work hours.

The move comes as Beijing intensified its efforts to boost two-way flows in its financial market, to enhance the yuan’s global status.

PBOC Governor Pan Gongsheng last month pledged to expand the international use of the digital yuan and called for the development of a multi-polar global currency system amid uncertainty sparked by U.S. tariff policies.

($1 = 7.1731 Chinese yuan renminbi)