The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown in April. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. While recovery in China has been faster than expected, the global economy’s long ascent back to pre-pandemic levels of activity remains prone to setbacks.
The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario--which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound--the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support. The risks for even more severe outcomes, however, are substantial. Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.
After strong growth in 2017 and early 2018, global
economic activity slowed notably in the second half
of last year, reflecting a confluence of factors affecting
major economies. China’s growth declined following
a combination of needed regulatory tightening to rein
in shadow banking and an increase in trade tensions
with the United States. The euro area economy lost
more momentum than expected as consumer and
business confidence weakened and car production in
Germany was disrupted by the introduction of new
emission standards; investment dropped in Italy as
sovereign spreads widened; and external demand,
especially from emerging Asia, softened. Elsewhere,
natural disasters hurt activity in Japan. Trade tensions
increasingly took a toll on business confidence and, so,
financial market sentiment worsened, with financial
conditions tightening for vulnerable emerging markets
in the spring of 2018 and then in advanced economies
later in the year, weighing on global demand. Conditions
have eased in 2019 as the US Federal Reserve
signaled a more accommodative monetary policy
stance and markets became more optimistic about a
US–China trade deal, but they remain slightly more
restrictive than in the fall.
China’s bond market is destined to play an increasingly important role, both at home and abroad. And the inclusion of the country’s bonds in global indexes will be a milestone for its financial market integration, bringing big opportunities as well as challenges for policymakers and investors alike. This calls for a good understanding of China’s bond market structure, its unique characteristics, and areas where reforms are needed. This volume comprehensively analyzes the different segments of China’s bond market, from sovereign, policy bank, and credit bonds, to the rapidly growing local government bond market. It also covers bond futures, green bonds, and asset-backed securities, as well as China’s offshore market, which has played a major role in onshore market development.