IntroductionThe bond market is a financial market that identifies two different environments: the primary market, in which members issue new debt; and the secondary market, where they can sell or buy debt securities. The primary purpose of the bond market is to ensure a long-term financing mechanism for both private and public outflows. Traditionally the global bond market has been dominated by the United States; however, today the United States makes up less than half of the market (Pike, Neale, & Linsley, 2012), while China has grown significantly. Since the 1990s, China's economy has grown at a rate of 10% annually, and its bond market has gone from being virtually non-existent to one of the world's leading markets (Goldman Sachs, 2013). According to HSBC, with approximately $4 trillion, it is currently the fourth largest after the United States, Japan and France, increasing by approximately 30% annually (Financial Times, 2014). China's bond market is developing into a more market-oriented structure, rather than an administrative structure. However, investors still face barriers to accessing China's booming bond market, such as the number of restrictions on who and how can invest, a lack of knowledge regarding the types of bonds that exist, and other aspects of China's bond market (Goldman Sachs, 2013). The chart below shows an overview of the growth of the Chinese bond market over the past 10 years and its current global position. Source: Goldman Sachs 2013 Bond Market Segmentation The PRC bond market comprises two markets, which complement and interconnect with each other ( Bond Market Guide). They are the brand of exchange bonds... in the middle of the paper... a solid foundation for the bond market. The future outcome of market expansion is the improvement of regulatory organization along with the implementation of market-wide efforts. Furthermore, the government should develop a link between the interbank bond market and the stock market focused on a clear direction of market expansion (Bond Market Guide). These measures should lead to the elimination of capital controls and an economy with better interaction with foreign investment. As a matter of fact, a liquid bond market is essential to help prevent capital inflows and outflows, which would cause interest rate volatility. A properly functioning government bond market – i.e. with abundant liquidity – is capable of becoming the market reference point for pricing instruments in other markets and for risk-free rates (Insight, 2013).