China is advancing a new strategy to increase international sales of its domestic bonds by expanding the offshore yuan pool through the Shanghai Clearing House (SHCH). SHCH chief Ma Jianyang highlighted that the initiative seeks to reinforce Shanghai’s dominance in offshore yuan derivatives clearing while protecting the domestic market from cross-border financial risks.

As part of this effort, SHCH plans to broaden its clearing services to include offshore yuan bonds, interest rates, and foreign exchange products, providing foreign investors with enhanced risk-hedging tools for overseas yuan assets. Ma wrote in an article published on the social media account of China Finance magazine that this expansion will "reinforce our clearing dominance over yuan products."

Ma, a former deputy chief of the People’s Bank of China’s financial market department, also emphasized the need to develop dedicated regulations to unify the standardisation and supervision of central counterparty clearing. He called for exploring liquidity risk constraints and support facilities to stabilise market expectations.

The Shanghai Clearing House, affiliated with China’s central bank, is a key component of Beijing’s broader efforts to increase its global financial influence and promote yuan internationalisation. This announcement coincides with Shanghai’s release of an action plan to expand offshore business activities, including bond issuance in the pilot free-trade zone and foreign exchange trading, as the city strives to become an international financial centre.

Sources