Mandy Chiang
- Dim sum issuance tripled over three years, driven by low Chinese interest rates and growing demand for offshore renminbi funding.
- Corporate and government activity surged, with mainland and foreign issuers tapping the market as CNH liquidity improves.
- Renminbi internationalisation is accelerating, positioning dim sum bonds as a key component of China’s global finance strategy.
After a quiet period in the middle of the last decade, China’s offshore (“dim sum”) bond market is booming again.
In this FTSE Russell insight, we provide an overview of the dim sum bond market’s development. We explore its issuer base and recent issuance statistics, showing how both corporate and government entities are increasing their levels of activity in the dim sum market. We go on to look at the interest rate differentials between the offshore Chinese currency (“offshore renminbi” or “CNH”) and other global currencies, which are incentivising the issuance of dim sum bonds.
We argue that a combination of low Chinese policy interest rates, an improved market infrastructure, more frequent government issuance, improved secondary market liquidity and the internationalisation of the renminbi are all contributing to the increased popularity of this asset class.
A trebling of market size in three years
Dim sum bonds are renminbi-denominated bonds issued and settled outside the People’s Republic of China (PRC), mainly in Hong Kong. After a relatively quiet period in the mid-2010s, dim sum market activity has accelerated in recent years: over the three years to end 2024, dim sum issuance trebled, with annual issuance reaching CNH1.7trn last year (see Figure I).
Corporates represented around 70% of this total: their annual issuance of dim sum bonds was CNH1.2trn in 2024 (55% in certificates of deposit and 45% in bonds—see Figure II).
Government dim sum issuance has also risen sharply since 2018: government dim sum issuance reached CNH360bn in 2024, with 75% of the total in People's Bank of China (PBoC) bills and 25% in Chinese and Hong Kong government bonds (see Figure III).
Figure I. Annual dim sum bond issuance by issuer type
Figure II. Corporate dim sum bond issuance by instrument type
Figure III. Government dim sum bond issuance by instrument type
The changing issuance profile of dim sum bonds
Growth in non-financial corporate dim sum issuance
Financial sector firms are still the most active dim sum issuers. However, non-financial dim sum issuance increased fivefold during the 2020-2024 period (when compared to the previous five years), reflecting growing use of the offshore renminbi by non-financial firms as an alternative source of funding (see Figure IV).
Around 75% of non-financial corporate dim sum issuers are based in mainland China (mainly in the construction and real estate services sectors), while 25% are foreign issuers, mainly in the energy and metals/mining sectors.
Figure IV. Industry profile of corporate dim sum bond issuance
Rise in domestic dim sum issuance
Between 2015 and 2019, domestic (mainland China-based) issuers accounted for 35% of total corporate dim sum bond issuance, but by 2020-2024, the share of domestic issuers in the dim sum corporate bond market had risen to 54% (see Figure V).
Figure V. Country profile of corporate dim sum bond issuance
A snapshot of dim sum yields and durations
Despite the market’s recent expansion, the bonds outstanding in the dim sum market still have a relatively short maturity, with an average duration of 3.6 years in May 2025, compared to 5 years for the onshore Chinese bond market (see Figure VI, where “CNYBIG” is the FTSE Chinese (Onshore CNY) Broad Investment-Grade Bond Index and “DimSumIG” is the FTSE Dim Sum (Offshore CNY) Investment Grade Bond Index).
The recent yield premium of dim sum bonds over bonds issued in the onshore market is likely to reflect the dim sum market’s relative liquidity shortfall (see below).
Figure VI: Dim sum bond historical yields and durations
| Year | Average Yield | Average Duration | ||
|---|---|---|---|---|
| CNYBIG | DimsumIG | CNYBIG | DimsumIG | |
| 2021 | 3.06 | 2.92 | 4.84 | 3 |
| 2022 | 2.66 | 3.18 | 4.87 | 2.77 |
| 2023 | 2.64 | 3.1 | 4.92 | 2.61 |
| 2024 | 2.11 | 2.67 | 4.98 | 2.93 |
| 2025* | 1.64 | 2.29 | 5.1 | 3.67 |
Source: FTSE Russell. 31/12/2020-31/05/2024. *Year 2025 calculation includes January to May data. Past performance is no guarantee of future returns. Please see the end for important legal disclosures.
How interest rate differentials are driving dim sum issuance
One macroeconomic factor explaining the recent surge in dim sum bond issuance is China’s relatively attractive funding rate.
In 2022, while the US Federal Reserve raised interest rates from near zero to over 5% to combat rising inflation, the People’s Bank of China (PBOC) moved in the opposite direction and implemented several rate cuts, aiming to stimulate the economy amidst weakened domestic demand and a struggling property sector.
In Figure VII, we show the divergence of policy interest rates in major economies during the past decade: China has cut its policy rate steadily (and to a historic low), whereas the UK and the US are keeping their interest rates near the top of the ten-year range.
Figure VIII shows the yields of 1-5 year US Treasuries, 1-5 year onshore (CNY) and 1-5 year offshore (CNH) Chinese government bonds. Since 2020, the relationship between US and Chinese government bond yields has inverted, with US Treasuries moving from a 2-3% yield discount to a 2-3% yield premium.
As a result of this shift, funding in the renminbi has become more attractive since 2022: in a recent article, Reuters reported that companies could save up to 150-250 basis points a year by funding themselves in renminbi.
Figure VII. The divergence in global policy interest rates
Figure VIII. 1-5 year government bond yields in US and China (offshore and onshore)
Improving liquidity in the offshore renminbi
In addition to the interest rate advantage for dim sum bond issuers, several policy initiatives have improved the offshore renminbi debt market’s infrastructure.
These include more frequent government issuance in the offshore market, refinements to the liquidity facility in Hong Kong and a series of initiatives under the theme of CNH internationalisation.
Since the introduction of PBOC bills in 2019, both the Chinese and Hong Kong governments have raised debt more frequently in the offshore market.
As at the May 2025 index profile date, the FTSE Dim Sum Bond index tracked 38 domestic government bonds with an aggregate CNH150bn outstanding, a significant expansion compared to five years earlier, when the index tracked 22 bonds with an aggregate CNH50bn outstanding.
Reductions in trading costs have accompanied this growth in the market’s size. In Figure IX, we show the steady decline since 2020 in the bid-ask spread of offshore Chinese government bonds.
Offshore and onshore governmental bodies and agencies, such as the Hong Kong Mortgage Corporation and the Shenzhen, Guangdong and the Hainan regional governments have also diversified their funding sources by tapping into the dim sum bond market (see Figure I).
Figure. IX Average bid-ask spread of Chinese government bonds traded offshore
Internationalisation of the renminbi
According to SWIFT, the offshore renminbi’s share as a global payment currency increased from 2% in January 2023 to 4% in November 2023, ranking the renminbi fourth in importance globally after the US dollar, euro and pound sterling.
In the category of trade finance, the offshore renminbi’s share was 7%, placing it second in importance globally after the US dollar. The offshore renminbi’s share in world foreign exchange reserves increased from negligible levels before 2020 to 2.2% in 2024 (see Figure X).
In addition, the share of these transactions conducted through Hong Kong has also gone up, rising from 75% in 2019 to 80% in 2024. As a result, the volume of renminbi deposits in Hong Kong has surged in recent years (see Figure XI), despite the low interest rate on the currency, suggesting that rising offshore use of the renminbi is improving the liquidity pool.
Nevertheless, dim sum bond liquidity still has room to improve. In Figure XII we show the average issuance amount and the average bid-ask spread of Chinese government bonds (CGBs) denominated in renminbi, US dollars and euro. Compared to CGBs denominated in US dollars and euro, those denominated in the offshore renminbi have a small average size and lower liquidity.
Figure X. Rising global role of the offshore renminbi
Figure XI. CNH deposits in Hong Kong
Figure XII. Liquidity comparison of CGBs denominated in different currencies
Factors supporting further dim sum bond market growth
In recent years, several Chinese government policy measures have promoted the use of the offshore renminbi and they are likely to support the continuing growth of the dim sum bond market.
In general, these policy measures have three objectives: first, to strengthen the channels between the onshore and offshore renminbi markets (for example, via the southbound Bond Connect scheme); second, to strengthen Hong Kong as a renminbi liquidity hub (for example, by expanding the range of eligible collateral in the repo market and by increasing the size of currency swap agreements); and third, to facilitate access to and the adoption of renminbi in the international markets (for example, via renminbi swap lines with other central banks and via bilateral agreements to increase the use of renminbi in trade).
In summary, the efficiency of offshore funding facilities, the rising cross-border use of the currency, the stability of the renminbi foreign exchange rate and the attractiveness of the interest rate for issuers are all supporting the further development of the DSB market.
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