The China Government Securities Depository Trust and Clearing (CDC) has proposed the initiative to industry groups and regulators in Hong Kong, the South China Morning Post reported.
The scheme would give foreign investors wider access to the Chinese bond market, similar to the way the Stock Connect program bolsters cross-border trading between Hong Kong and Shanghai.
Consultations about the Bond Connect program have started and a proposal has been submitted by the Treasury Markets Association, a body initiated by the Hong Kong Monetary Association.
A new channel would increase the circulation of renminbi between the onshore and offshore markets.
The CDC is a state-owned financial institution which was set up by the People’s Bank of China in 1996 to provide custody, clearing, and settlement services for bonds and other fixed-income securities.
This news follows the recent surge in Chinese funds flowing into Hong Kong-listed shares, which was partly powered by the rule change that meant investors no longer need a domestic institutional investor licence (QDII) to use Stock Connect.
These initiatives are said to signal the gradual relaxation of controls in China as the country aims to increase its investment overseas.
