The Hong Kong government has signaled a clear intention to accelerate the introduction of treasury futures in the city, a move seen as a significant step forward in enriching financial market connectivity and advancing the internationalization of the Chinese yuan. In the 2026-2027 budget address delivered to the Legislative Council on February 25, Financial Secretary Paul Chan highlighted that the national "15th Five-Year Plan" proposal explicitly supports Hong Kong's deeper integration into and contribution to the country's development strategy.
Within the financial sector, Hong Kong will actively collaborate with the mainland to expedite the implementation of various measures, including the launch of treasury futures, to diversify options under the financial markets connectivity schemes. This initiative is widely interpreted by the industry as another positive signal aimed at enhancing the appeal of China's domestic bond market and promoting the global use of the renminbi.
How should this development be interpreted? According to Xu Liang, Chief Fixed-Income Analyst at Guolian Minsheng Securities, the introduction of treasury futures in Hong Kong would further diversify investment strategies available to overseas investors for Chinese bonds, thereby increasing the international attractiveness of yuan-denominated debt. This would allow global investors to participate more deeply in the pricing mechanism of domestic bonds, leading to more reasonable and efficient pricing of Chinese government debt.
"Historically, Hong Kong has experience with launching treasury futures. If reintroduced, the actual implementation could be more effective and operations potentially smoother," Xu noted.
Regulatory bodies from both sides have frequently emphasized the need to "accelerate the launch of treasury futures in Hong Kong." The budget's stance on treasury futures aligns with a series of policy directions observed over the past several months. A review indicates that "promoting the listing of treasury futures in Hong Kong" has become a recurring theme in recent policy discussions.
For instance, in January 2025, People's Bank of China Deputy Governor Zou Lan stated at the 19th Asian Financial Forum that the central bank would prioritize several key initiatives. These included working with relevant departments to provide more offshore renminbi treasury bonds and other high-credit-quality yuan assets in the Hong Kong market, thereby enriching the city's renminbi product ecosystem. He also emphasized continued close communication and coordination to speed up the listing of renminbi-denominated treasury futures in Hong Kong.
On September 25 of the same year, at the inaugural Hong Kong Fixed Income and Currency Forum, Zou mentioned that the PBOC, along with Hong Kong monetary and regulatory authorities, was continuously optimizing and expanding the application scenarios for Hong Kong's renminbi bond market. He stated that the central bank was promoting the acceptance of mainland Chinese bonds as eligible collateral in Hong Kong and global markets, providing more offshore renminbi treasury bonds, and accelerating the launch of renminbi treasury futures in Hong Kong.
On November 4, China Securities Regulatory Commission Vice Chairman Li Ming, speaking at the Fourth International Financial Leaders Investment Summit, also expressed active support for Hong Kong's launch of treasury futures to enrich the city's suite of offshore renminbi risk management tools.
Momentum continued into 2026. On January 26, Hong Kong Chief Executive John Lee, at the Asian Financial Forum, stated that Hong Kong would continue to explore measures to deepen the connectivity between mainland and Hong Kong financial markets, including launching offshore treasury futures and expanding interest rate derivative businesses under the Stock Connect schemes.
Furthermore, the scope of eligible participants for treasury futures is expanding. For example, on January 5, guidelines released by Guangdong Province proposed supporting qualified foreign financial institutions in participating in domestic bond underwriting and allowing eligible foreign banks to participate in treasury futures trading pilots. The guidelines also highlighted strengthening financial cooperation with Hong Kong and Macao to facilitate higher levels of convenience for cross-border renminbi settlement.
The investment value of Chinese treasury futures has become increasingly prominent in recent years. Against a backdrop of heightened global financial market volatility and challenges to US dollar credibility, renminbi assets are increasingly recognized for their hedging and investment qualities. A series of financial opening-up measures are constructing new bridges for global capital to increase exposure to China's high-quality financial assets.
According to previous central bank disclosures, liquidity in China's bond market has consistently improved, with the annual turnover rate of government bonds rising from 2.4 times five years ago to 3.8 times. In terms of investment value, yuan-denominated bonds demonstrate multiple advantages. Regarding yield, Chinese bonds rank among the global leaders for both short-term and long-term, nominal and real yields. Data shows that holding a portfolio of Chinese bonds from a global composite index over the past decade would have yielded approximately 70% returns. Amid global high inflation, the real yield of renminbi bonds remains attractive.
In terms of hedging attributes, the correlation between renminbi bond returns and those of G7 or other emerging economy bonds is low, offering good diversification value. Liquidity-wise, trading in interest rate bonds like government and policy financial bonds is active, with bid-ask spreads having narrowed significantly to levels comparable with developed markets.
Moreover, significant potential for further market opening remains. Currently, foreign investors hold about 2% of Chinese bonds, indicating substantial room for growth compared to developed economies and some emerging markets. This suggests that with the launch of risk management tools like treasury futures and the deepening of connectivity mechanisms, the attractiveness of China's bond market to international capital is poised to strengthen further, propelling the renminbi internationalization process into a new phase.
**Five Measures to Clarify the Path for RMB Internationalization**
Notably, beyond treasury futures, Financial Secretary Chan pointed out that the "15th Five-Year Plan" proposes advancing renminbi internationalization and elevating the level of capital account convertibility. Hong Kong will leverage its unique advantages to actively support the national strategy through five specific measures.
These measures include: 1. Doubling the total quota for Renminbi Business Funding (RBF) arrangements to 200 billion yuan, encouraging financial institutions to facilitate broader use of renminbi by enterprises and clients in trade and cross-border business. 2. Promoting more convenient foreign exchange quotation and trading between the renminbi and other regional currencies to reduce transaction costs. 3. Regularly issuing renminbi bonds with different maturities to enrich the offshore renminbi market product range and improve the offshore renminbi bond yield curve. 4. Collaborating with the industry to actively expand the construction of an offshore renminbi interest rate curve and researching specific measures to strengthen the price discovery function of short-to-medium-term interest rates. 5. Attracting high-quality issuers to increase renminbi bond issuance in Hong Kong, tapping into emerging markets, and encouraging more cross-border renminbi transactions to be conducted in Hong Kong.
Zeng Gang, Chief Expert and Director of the Shanghai Finance and Development Laboratory, analyzed that these five measures collectively stimulate market vitality from three dimensions: supply side, cost side, and product side.
On the supply side, doubling the RBF quota to 200 billion yuan directly expands the "ammunition depot" available to financial institutions for renminbi loans and liquidity management. This effectively alleviates the challenge of insufficient renminbi funding for enterprises in trade and investment scenarios, giving banks more confidence to expand related businesses.
On the cost side, facilitating convenient FX quotes and trades between renminbi and regional currencies aims to compress bid-ask spreads and intermediary costs, reducing the friction costs for enterprises using renminbi for settlement. For businesses in Southeast Asian trade circles that frequently use the US dollar as an intermediary, the impact of this change would be directly visible.
On the product side, the regular issuance of renminbi bonds with varying maturities helps construct and refine the offshore renminbi yield curve, providing a benchmark for pricing by other issuers and further enriching market depth. The synergistic effect of these three measures will propel the offshore renminbi market from scale expansion towards quality enhancement, attracting more international institutions to hold and utilize renminbi assets.
Zeng further analyzed that from a long-term strategic perspective, these measures are highly aligned with the national goal of "accelerating the building of a financial powerhouse," carrying significance that transcends individual business areas.
Regarding strengthening Hong Kong's hub status, while the city currently handles over 70% of global offshore renminbi FX trading volume, centers like Singapore and London are accelerating their layouts. Hong Kong can only consolidate its hub position by continuously deepening the irreplaceability of its products and services. The RBF expansion and yield curve construction are key infrastructure investments for establishing "pricing power" and becoming a "liquidity center."
In serving the national strategy, the "15th Five-Year Plan" explicitly calls for enhancing capital account convertibility and advancing renminbi internationalization. As an offshore testing ground, Hong Kong's successful practices can provide a reference for the mainland's opening-up path, testing institutional flexibility while avoiding systemic risks.
"Long-term, a mature and well-functioning offshore renminbi market in Hong Kong will serve as a 'channel' for the renminbi's inclusion in more international reserve and settlement systems, building a more solid credit foundation for the currency's international status and substantively contributing to the realization of the strategic goal of building a financial powerhouse," Zeng stated.
Industry insiders believe that whether it's launching treasury futures in Hong Kong, including renminbi counters in Stock Connect, or optimizing Bond Connect, the core objective remains consistent: to further enhance Hong Kong's role as a bridge for global capital allocating to renminbi assets.
For example, the launch of treasury futures in Hong Kong signifies, for the first time, providing international investors in the offshore market with a standardized tool for managing renminbi interest rate risk. This effectively addresses the long-standing hedging challenge for foreign capital regarding interest rate risk, potentially attracting increased inflows from long-term investors such as central banks and sovereign wealth funds.
Meanwhile, allowing mainland investors to buy and sell Hong Kong stocks directly in renminbi through Stock Connect opens a "direct currency channel" for capital flows. This not only reduces exchange costs and minimizes exchange rate volatility interference but also substantively strengthens the renminbi's attribute as an "investment currency," promoting its evolution from a trade settlement currency to broader application under capital accounts.