China Regulates Bond Market According to Market Principles, Reports State Media

SHANGHAI (Reuters) – China’s financial regulators are overseeing the bond market by adhering to market principles and considering macro-prudential and compliance aspects, according to state media on Saturday, which denied any allegations of market intervention.

In recent weeks, Chinese authorities have put a stop to a prolonged surge in the country’s bond market and reduced trading activity by issuing repeated warnings about the dangers of excessive purchasing.

Earlier this month, a financial market association affiliated with the People’s Bank of China announced plans to investigate four rural commercial banks for suspected manipulation of the treasuries market.

In response to claims by some market participants suggesting that the central bank was engaging in administrative intervention, the PBOC-backed Financial News asserted that as long as institutions operate within market principles and the rule of law, regulators would refrain from direct interference.

The publication further indicated that allegations of market intervention were leading to confusion, citing sources familiar with the issue. It also cautioned about the potential for a “stampede” in the bond market driven by unilateral consensus behavior.