Recognising the increasing importance of China in the global bond markets, and in light of significant reforms and initiatives to attract foreign investors, as well as the inclusion of China in major global bond indices, the International Capital Market Association (ICMA) has published a new report focusing on the trends, opportunities, and challenges related to the internationalization of the China corporate bond market, both onshore and offshore. China’s onshore bond market, at approximately $15 trillion equivalent of outstandings, is the second largest in the world, after the US. ICMA estimates the overall size of the outstanding onshore credit bond market to be approximately valued at $5.8 trillion of which $3.7 trillion is non-financial corporates and $2.1 trillion are financial bonds. Market participants interviewed for the report indicate that one of the main motivations for investing in China’s corporate bond markets is the continuing strong economic backdrop and in the onshore market the relatively high nominal returns in comparison to global bond markets where yields are close to zero or negative. A major catalyst for foreign inflows into the onshore bond market since 2019, particularly passive investment flows, has been the inclusion of China in various global bond indices. Among the barriers to foreign investors entering the onshore market are challenges with assessing the credit quality of underlying corporates, which require investors to dedicate time and resources to their own proprietary credit analysis and the incidence and outcomes of corporate defaults. The lack of a liquid secondary bond market is also perceived as a major obstacle to internationalisation of the onshore credit market. The report concludes that while there are multiple challenges for international investors who wish to enter the $5.8 trillion onshore credit market that are likely to persist in the short-term, they are not insurmountable. The potential for transforming the China onshore credit market into a truly global market is significant.