State-owned Enterprises and the Regulatory Reform of Bond Markets in China

China’s bond market has expanded eight-fold in the past decade. This rapid growth has transformed it into one of the largest bond markets globally. However, owing to the dual-track policy related to the public and private sectors during the early decades of Chinese economic reform, the regulatory regime of the bonds issued by state-owned enterprises and those that are privately owned has been treated differently and regulated by different authorities. The segmented regulation of government bonds, corporate bonds, and financial bonds has seriously raised the transaction cost of issuers and motivated regulatory arbitrage as well. More interestingly, the regulatory system of the bond markets in China has diversified during the past two decades. The regulatory regime of listing companies on the Chinese stock exchanges, by contrast, was unified as early as the late 1990s. Although the Financial Committee of the State Council has promised to unify the regulatory system of the Chinese bond markets since 2017, it does not appear to be easy to change the existing institution and there is uncertainty surrounding reform. Based on a detailed review of the origins and evolution of the regulatory regime of the Chinese bond markets, this research suggests that the segmented regulatory regime is rooted in the unequal status of the public and private sectors in the Chinese economy. Therefore, the prerequisite for unifying China’s bond market regulation should be the equal treatment of state-owned enterprises and privately owned companies.

Speaker

Dr Chi Zhang currently teaches corporate & financial law at the School of Law, the University of Glasgow. He has engaged in research on corporate governance and financial regulation, with a particular focus on China's capital markets. His research outputs appeared in more than twenty academic journals. Dr Zhang has also been invited as panel chair, academic speaker, or commentator at international academic conferences hosted by world-leading research institutions including the Lauterpacht Centre for International Law at the University of Cambridge and the American Society of Comparative Law, etc. 

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