File photo shows a worker counts Chinese currency Renminbi banknotes at a bank in Tancheng County of Linyi City, East China's Shandong Province. (Photo: Xinhua)
The 5-year China Government Bond (CGB) futures started trading in Hong Kong on Monday, the only CGB futures in the offshore market.
Analysts said the CGB futures will enrich risk management tools for international investors, enhance the appeal of yuan-denominated assets, consolidate the role of the Hong Kong Special Administrative Region (HKSAR) as a major yuan trading center, and strengthen the confidence of long-term investment in China.
Each 5-year CGB futures contract is sized at 500,000 yuan ($74,051), and settled in cash rather than physical delivery of bonds. The September futures on 5-year Chinese sovereign notes opened at 106.685 yuan per contract, before rising to an intraday high of 107.730 yuan.
"In the long run, the debut of this important product will further enrich the usage scenarios of offshore yuan, reinforce Hong Kong's function as a global offshore yuan hub, and enhance the effectiveness of financial services in supporting the real economy," Wu Qing, chairman of the China Securities Regulatory Commission (CSRC), said on Monday in Hong Kong during the launch ceremony of the futures.
"Currently, together with the HKSAR government agency, the CSRC is making every effort to advance preparatory works for the inclusion of yuan-denominated stock trading counters and real estate investment trusts (REITs) into the Stock Connect program," Wu said.
"We will support index companies from both sides in strengthening cooperation to launch more indices based on Chinese assets, promote industry institutions from both markets to roll out more exchange-traded fund (ETF) products rooted in the two markets and aligned with China's modern industrial system, optimize the ETF product registration mechanism, and jointly enhance the international influence of China's indices and assets," Wu said, adding that efforts will also be made to support the HKSAR in launching more futures varieties priced and settled in yuan.
As part of the efforts to broaden the investment scope for qualified foreign investors, the CSRC announced in April that qualified foreign investors were allowed to participate in treasury bond futures trading, with trading activities limited to hedging purposes.
"The securities regulator has opened up access for qualified foreign investors, and coupled with the launch of the 5-year CGB futures by HKEX this time, the moves enrich interest rate risk management tools available to foreign institutional investors," Tian Lihui, dean of the Institute of Financial Development at Nankai University, told the Global Times on Monday.
As market mechanisms continue to improve and various business sections - spot bonds, repurchase agreements, swaps, and futures - are increasingly integrated, the move is expected to attract foreign capital to invest in Chinese assets, Tian said.
The expansion in the number of qualified foreign institutional investors (QFIIs) is a signal of foreign capital purchasing more Chinese assets.
According to the data released by the CSRC in July, the number of QFIIs had reached 990 as of the end of June 2026. Among them, 60 institutions have been granted qualification approvals so far this year, financial media outlet China Securities Journal reported on Monday.
China's capital market opening-up has entered a new stage of institutional opening-up, and Hong Kong's role as a bridge will accelerate the depth of cooperation, Tian said.
Going forward, Hong Kong's role will be upgraded from a "capital channel" to an offshore yuan risk management hub: on one hand, it will refine the yuan product ecosystem through instruments such as government bond futures to attract long-term capital; on the other hand, by deepening regulatory coordination with the mainland, it will explore cross-border data sharing and mutual recognition of green finance standards, thereby consolidating its status as the global offshore yuan hub, Tian said.
On Monday, the CSRC and the Securities and Futures Commission of the HKSAR announced new measures to deepen cooperation and coordinated development of the two markets, consolidating and enhancing Hong Kong's status as an international financial center.
"Under 'One Country, Two Systems,' Hong Kong enjoys the unique advantage of having strong support from the motherland while being closely connected to the world. As an important bridge in our country's financial system, Hong Kong will continue to leverage its role in 'bringing in and going global,' better integrating into and serving the overall development of our country," John Lee, chief executive of the HKSAR, said on Monday.
Hong Kong is proactively aligning with the National 15th Five Year Plan and is working at full speed to formulate the city's first five-year plan, fostering high quality market development by promoting yuan internationalization and cross-border capital flows, Lee said.