The outstanding scale has nearly reached 200 trillion. How will the bond market’s structure evolve? The “15th Five-Year Plan” provides guidance for urban investment transformation, accelerating the bond market’s internationalization process.

Ask AI · In the diversification of urban investment company (chengtou) transformation, which paths are more likely to succeed?

China Finance News (3月26) (Edited by Yang Bin)** As of the end of 2025, the outstanding balance of various types of bonds in China reached 196.17 trillion yuan, and market capacity has been steadily improving. At the same time, the development momentum of innovative products such as science-and-technology innovation bonds (kechuang bonds) has been strong, and the bond market structure has continued to be optimized. In 2026, among major bond-market products such as science-and-technology innovation bonds, chengtou bonds, and offshore bonds issued abroad, what trends are still worth paying attention to? At the “2026 China Bond Market Credit Risk Outlook Forum” held recently by United Credit, participating experts shared a number of views on this.

At present, the science-and-technology innovation bond market is developing rapidly, but there is still enormous room for growth. The market-oriented transformation of chengtou companies has entered a critical phase, and the “Fifteenth Five-Year Plan for modern industrial development” provides direction for the transformation of chengtou enterprises. Internationalization of China’s bond market includes a two-way process of “bringing in” and “going out,” and the issuance of offshore bonds related to industrial entities will continue to expand.

Serious issues with debt monetization in Europe and the U.S.; China’s bond innovation products are developing well

Recently, escalating geopolitical conflicts have been affecting global capital markets. And in the view of Ai Zhizhi, Deputy General Manager of United Credit, the high-debt problem across the world is also worth attention. Given that, in a context where inflation may rise, major central banks globally may maintain prudent monetary policy or tighten, the negative effects of debt monetization in Europe and the U.S. have begun to rebound on the bond market.

In March 2026, the yield on U.S. 30-year Treasury bonds rose to more than 4.9%. In Europe, interest rates exceeded the levels observed in September 2025. Ai Zhizhi pointed out that investors’ concerns about the fiscal conditions of the governments of Europe and the U.S. directly translate into higher risk-premium requirements for long-term government bonds, making the yield curve for long-term government bonds even steeper.

Looking at China’s bond market, in 2025 China issued various types of bonds totaling 88.52 trillion yuan, up 12.35% year over year. As of the end of 2025, the outstanding balance of various types of bonds reached 196.17 trillion yuan, up 11.45% from the end of the previous year. Market capacity has been steadily improving, and financing functions have continued to strengthen.

Lin Qing, General Manager of the Research & Development Department at United Credit, said that in 2025, the issuance momentum for innovative bond products in China was strong. With the “Science and Technology Board” in the bond market officially taking off, the science-and-technology innovation bond market has become the core highlight of innovation in the bond market. In 2025, the issuance scale of science-and-technology innovation bonds was close to 2.3 trillion yuan, nearly doubling year over year. Financing costs fell, financing for service entities became more diversified, and the market ecosystem continued to improve. At the same time, science-and-technology innovation bonds have become an important financing tool for private enterprises, effectively broadening private firms’ financing pathways.

Lin Qing expects that in 2026, the supply structure of credit bonds in China will continue to be optimized. Under the policy tone of “controlling the increase and converting stock into risk reduction,” chengtou bonds will face continued strict supervision, and the issuance scale may shrink slightly. For industrial bonds, closely following the requirements of the “Fifteenth Five-Year Plan,” policy authorities are expected to continue to increase support for financing for green bonds, science-and-technology innovation bonds, and bonds issued by private enterprises as well as small and medium-sized enterprises (including micro and small firms). The issuance scale of related industrial bonds may maintain a continuously growing trend, injecting strong financial momentum into the transformation and upgrading of industries.

Facing changes in the bond market, Wan Huaiwei, President of United Credit, said that China’s credit rating industry is accelerating its iteration and upgrade. Rating agencies are rolling out AI R&D and actively exploring an intelligent agent collaboration work system based on artificial intelligence large-scale models. Through intelligent agent collaborative work, they will jointly push credit rating work to move from traditional manual models to a new human-machine coordinated paradigm. With the launch of the “Science and Technology Board” in the bond market, the credit rating industry is actively building a rating framework that matches it. Chinese-funded rating agencies are also moving toward internationalization through initiatives such as the Belt and Road Initiative and mechanisms among BRICS countries.

The “Fifteenth Five-Year Plan” provides guidance for chengtou transformation; bond market internationalization is a two-way process

Specifically in the science-and-technology innovation bond market, Tan Xinyuan, Technical Director of the Industrial and Commercial Rating Department at United Credit, believes that although the science-and-technology innovation bond market is developing rapidly, as of the end of 2025, the outstanding balance and number of existing science-and-technology innovation bonds accounted for only 6.31% and 5.97% of the outstanding balance of credit bonds, respectively—leaving still enormous room for development.

Regarding chengtou debt, Zhang Li, Director for Public Utilities at United Credit, said that as the resolution of hidden debt moves toward the end, the focus of debt resolution will shift to resolving risks in operating-related debt. During the process of debt resolution, some regions still face relatively large liquidity pressures, and future trends in negative events related to products such as non-standard products also need to be watched.

Zhang Li believes that the market-oriented transformation of chengtou companies has entered a critical period. Because regional industrial resources and financial resource endowments differ, the difficulty of transformation shows a degree of divergence. Chengtou companies that explore suitable transformation paths based on local conditions will be more likely to gain opportunities for long-term development. The “Fifteenth Five-Year Plan” for a modern industrial system provides direction for the transformation of chengtou enterprises—for example, extending business to rural areas to drive industrial development. Areas such as urban renewal and affordable housing also provide space for expanding chengtou businesses.

For bond market internationalization, Li Weifeng, Director of United International, said that the internationalization of China’s bond market is a two-way process, including both “bringing in” and “going out.” “Bringing in” is reflected in the development of the Panda bond market. In 2025, the issuance scale of Panda bonds exceeded RMB 160 billion, ranking second highest in history. Moreover, the proportion of Panda bond issuance entities with foreign-investor backgrounds reached 52.8%. “Going out” reflects the development of China’s offshore bond market. After a trough in 2022 to 2023, the offshore bond market for China-funded issuers has been recovering in recent years. In 2025, the issuance scale of newly issued China-funded USD bonds increased 15.6% year over year to reach USD 112.7 billion.

Li Weifeng pointed out that under a strict regulatory environment, issuance of offshore bonds by China-funded chengtou companies has slowed somewhat. It is expected that chengtou companies that successfully achieve business model transformation may be more likely to obtain offshore financing channels than traditional chengtou companies, and continuing refinancing needs will continue to support chengtou companies to issue offshore bonds continuously in 2026. At the same time, issuance of offshore bonds by industrial entities will continue to expand.

(China Finance News; Yang Bin)