China's bond market will gain in
influence in the next 10 years as the economy grows and the
government deregulates the market, Goldman Sachs Group Inc. said.
Outstanding debt may reach 60 percent of the economy in
2016 from about 27 percent now, as the yuan and interest rates
are allowed to fluctuate more freely, according to a Nov. 20
Goldman report. An aging, increasingly affluent population will
spur demand for bonds, said Francesco Garzarelli, director of
macro and markets research in London.
Higher per-capita incomes ``usually translate into greater
sophistication or maturation of capital markets,'' Garzarelli
said in an interview yesterday.
China wants to encourage companies to borrow through debt
issuance instead of taking loans from banks, which have been
saddled with $163 billion of non-performing debt. An expanding
bond market will help sustain economic growth, by putting a more
accurate price on investment risks, Goldman said.
The government's decision this month to let banks lend
bonds for the first time shows determination to develop the
market, Garzarelli said.
