Yuan debt issuances by Chinese and foreign entities reached a record of one trillion yuan this year, driven by historically low interest rates in China. The 'dim sum' and 'panda' bond markets have already surpassed the 2025 totals, which had also been a historic high. 'Dim sum' bond issuances reached 786.3 billion yuan and 'panda' bond issuances 231.6 billion yuan.
The difference between financing costs in China and the United States is driving this trend. Chinese 10-year government debt offers a yield of around 1.68%, compared to 4.78% for US Treasury bonds. Chinese companies represent almost two-thirds of 'dim sum' bond issuances, with Tencent being a recent example. Banks such as UBS and Goldman Sachs have also turned to these markets.
Beijing is encouraging the growth of these markets as part of its strategy to expand the international use of the yuan and reduce dependence on the dollar. Chinese authorities increased during the summer the amount that mainland China investors can invest in Hong Kong through the Bond Connect mechanism. Countries such as Indonesia, Slovenia, Pakistan and Kazakhstan have also tapped the 'panda' market.
Despite rapid growth, 'panda' bonds represent only 0.25% of the Chinese bond market. The yuan's share in the global financial system remains limited, although its use in trade financing has increased. Large multinationals remain largely absent from these markets due to the relatively small size of issuances.
