Shanghai Proposes Subsidies to Build Global Offshore Bond Hub

The Shanghai Financial Regulatory Bureau is proposing a series of subsidies to revitalize the offshore bond market within the Shanghai free trade zone (FTZ). The initiative aims to transform the zone into a global funding hub by offering rebates for advisory, legal, and banking fees of up to 2.2 million yuan ($327,000) per issue. These incentives, slated to run through 2028, specifically target high-profile foreign issuers such as central banks.

To qualify for the subsidies, bond issues must exceed 200 million yuan with tenors of at least one year. The bureau is offering additional incentives for green bonds and those utilizing the digital yuan. This effort seeks to increase foreign participation in a market currently dominated by local government financing vehicles and Chinese borrowers.

Complementing these subsidies, the People's Bank of China Shanghai office is now allowing onshore banks to purchase FTZ bonds, a market previously restricted to offshore investors. To maintain market balance, the central bank will impose a 50% cap on onshore investment per bond. These combined measures support a broader national goal of yuan internationalization and the vision of Governor Pan Gongsheng to establish Shanghai as a premier offshore financial services hub.