China will continue to push for the wider opening up of the domestic bond market to overseas investors and create a sound market environment, said Pan Gongsheng, vice governor of the Chinese central bank.

Speaking at a press conference on the sidelines of the annual legislative session, Pan said China’s bond market has taken quick steps in opening up, as the country improves policies to make it easier for overseas investors to issue panda bonds and invest in its bond market.

Overseas holdings in domestic bonds rose significantly over the past two years thanks partly to the Bond Connect program, the market access scheme launched in July 2017.

At present, overseas investors hold about 1.8 trillion yuan (US$268 billion) in China’s bond market, and the holdings rose nearly 600 billion yuan in 2018, according to Pan. However such holdings account for only a little more than 2% in domestic bond market, and “there is still huge potential in the future,” Pan said.

To further open up the bond market, China announced in November 2018 that overseas institutions investing in its bond market would be exempted from corporate income tax and value-added tax on their bond interest earnings for a period of three years.