Bond market opening under trade conflict: The role of foreign investors in pricing

Guangning Tian, Nanxuan Wang, Jiansuer Julaiti and Yipeng Li

Economic Analysis and Policy, 2025, vol. 86, issue C, 636-652

Abstract: Under the strain of international trade disputes, how does the participation of foreign investors affect the pricing of China's bond market? Does it further have a real effect? Based on the trading and issuance data of Chinese bond market, this paper finds that the credit spreads of enterprise bonds held by foreign investors in China decreased significantly after the Sino-US Trade War officially started on July 6, 2018, but increased in the interbank-market compared with the exchange-market. Issuers with foreign capital investment experienced a significant decrease in their financing costs when issuing bonds in the primary market after the Sino-US Trade War. Additionally, these issuers performed better post-trade war, with increased sales revenue, heightened R&D activities, and more investment in fixed assets. Contrary to expectations, bond market opening did not transmit or amplify risks; instead, they bolstered the resilience of bond issuers.

Keywords: Capital market opening; Trade conflict; Chinese bond market; Credit spreads (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0313592625000876
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:86:y:2025:i:c:p:636-652

DOI: 10.1016/j.eap.2025.03.015

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().