High-level Financial Opening: Collaboration Between Chinese and Foreign Banks Outlines a New Vision

How can Chinese and foreign banks achieve deep integration from shallow collaboration?

China Economic Journal Reporter Zhang Manyou reports from Beijing.

Since 2026, foreign banks have shown increasing enthusiasm for issuing Panda bonds in China’s interbank bond market. A series of benchmark projects have been launched, not only setting new records for issuance scale but also marking a new stage in the bidirectional opening of China’s bond market.

This wave of issuance is not an isolated phenomenon; it is driven by the combined effects of the growing attractiveness of RMB assets, the expansion of cross-border financing channels, and the continuous implementation of high-level financial opening policies.

With the recent introduction of several policies supporting the cross-border use of RMB and deepening interconnectivity, cooperation between Chinese and foreign banks is transitioning from simple business connections to a systematic, multi-layered deep integration, collectively playing the role of “super connectors” in the process of China’s high-level financial opening.

Active Panda Bond Market

On March 5, 2026, the Beijing Financial Assets Exchange supported Deutsche Bank AG (hereinafter referred to as “Deutsche Bank”) in successfully pricing and issuing 5.5 billion RMB worth of Panda bonds in China’s interbank bond market. This marks the first Panda bond issued by an EU financial institution in 2026, setting a record for the highest single issuance scale by a foreign bank.

This issuance attracted a total of 8.66 billion RMB in orders, with the 3-year and 5-year bonds receiving oversubscriptions of 1.55 times and 1.63 times, respectively. From Deutsche Bank’s perspective, against the backdrop of increasing global market volatility, the domestic RMB bond market offers a relatively stable financing environment.

Additionally, in February 2026, it was reported that Bank of China (601988.SH) successfully assisted Morgan Stanley in issuing 2.6 billion RMB worth of Panda bonds in the interbank market; on March 17, Bank of China, as the lead underwriter, assisted BNP Paribas in its first issuance of 5 billion RMB worth of Panda bonds in the interbank market, with maturities of 3 and 5 years; and on March 18, the United Overseas Bank Group (hereinafter referred to as “UOB”) successfully priced the first phase of its Panda bonds in 2026, with an issuance scale of 5 billion RMB, a maturity of 3 years, and a coupon rate of 1.83%.

CICC (601995.SH) analyzed that since 2026, the issuance of Panda bonds has significantly increased. As of March 20, 2026, the annual issuance of Panda bonds reached 77.935 billion RMB, a 96.8% increase compared to 39.6 billion RMB in the same period of 2025, with a net increase of 61.947 billion RMB, representing a 113.6% rise compared to the same period in 2025. Excluding the low base and individual bond issuance factors in 2025, the absolute volume of foreign Panda bond issuance remains at historically high levels. As of March 20, pure foreign issuers have issued 32.1 billion RMB, a 63% increase compared to the same period in 2025, and foreign credit issuers have issued 29.1 billion RMB, a 429% increase compared to the same period in 2025, reflecting strong RMB financing demand from overseas entities.

CICC noted that in 2026, the issuance of foreign Panda bonds was dominated by credit entities, accounting for over 90% of foreign Panda bonds. Banks were the primary issuers, with an issuance volume of 21.6 billion RMB, representing 74.2% of the issuance volume of foreign credit Panda bonds. The issuers included Barclays Bank, Morgan Stanley, CIMB Bank, Deutsche Bank, BNP Paribas, and UOB. Among them, Deutsche Bank has consistently issued Panda bonds in the domestic market in recent years, making it a major participant in bank-issued Panda bonds. UOB issued two phases of Panda bonds in 2019 and 2024, while Barclays Bank, Morgan Stanley, BNP Paribas, and CIMB Bank have all emerged as “new faces” in the Panda bond market since the third quarter of 2025.

Jingjing Gao, head of central funding, research, and client equity at UOB, stated, “As an institution that has issued Panda bonds multiple times, we fully recognize the depth and resilience of the onshore RMB market. Even in the context of a complex geopolitical environment, the market remains stable. We will continue to deepen our long-term cooperation with the Chinese RMB investor community to support the sustainable development of the Panda bond market.”

Industry insiders believe that the activity in the Panda bond market directly reflects the opening and interconnectivity of China’s bond market infrastructure to foreign capital, representing a typical achievement of the “bringing in” strategy at the capital market level.

In addition to serving as bond underwriters, the dimensions of cooperation between Chinese banks and foreign financial institutions are also gradually expanding. For instance, recently, Bank of China and DBS Bank have joined forces to continue promoting the international use of RMB and strengthen business innovation in areas such as fintech and cross-border finance. Additionally, in July 2025, Industrial and Commercial Bank of China (601398.SH) held a working meeting with Goldman Sachs, where both parties agreed to further expand cooperation in various fields including financial markets, asset management, wealth management, cross-border RMB, and Panda bond issuance, leveraging the complementary advantages of domestic and foreign markets.

According to Zeng Gang, director of the Shanghai Financial and Development Laboratory, the deepening cooperation between Chinese and foreign banks has progressed from localized exploration to systematic layout. In terms of cooperation forms, both sides have formed relatively mature collaborative models in multiple areas such as bond underwriting, cross-border investment banking collaboration, and interbank financing, with increased cooperation density and complexity compared to the past. This trend is not solely the result of policy-driven initiatives but is rooted in the inherent complementarity of both parties’ resource endowments—Chinese banks possess natural advantages in local networks, regulatory experience, and RMB clearing, while foreign banks leverage their international client resources, global product lines, and cross-border pricing capabilities to form differentiated competitiveness. The combination of these capabilities creates strong intrinsic motivation and sustainability for cooperation.

Tian Lihui, dean of the Financial Development Research Institute at Nankai University, told a reporter from China Business Journal that cooperation between Chinese and foreign banks is moving from “shallow collaboration” to “deep integration,” which is an irreversible trend. On the policy level, the central bank’s deepening interconnectivity has opened up institutional space for cooperation; on the market level, the bidirectional demand for Chinese enterprises’ globalization and foreign capital’s allocation of Chinese assets has made both sides “bridgeheads” for each other; on the capacity level, the local networks of Chinese banks and the cross-border expertise of foreign banks form a natural complement. In the future, such cooperation will exhibit three major trends: shifting from project collaboration to strategic synergy; moving from business connections to mechanism co-construction; and expanding from bilateral cooperation to multilateral networks, jointly playing the role of “super connectors” between China and global markets. This represents institutional collaboration of China’s financial integration into the global system, highlighting the win-win wisdom of high-level openness.

Cooperation Deepening

The continued activity in the Panda bond market is a direct reflection of the opening and interconnectivity of China’s bond market infrastructure to foreign capital and a microcosm of the implementation of high-level financial opening policies.

Xue Hongyan, a special researcher at SuShang Bank, believes that in the face of the new opportunities brought by high-level financial opening, Chinese and foreign banks will welcome diversified development space through complementary advantages. For Chinese banks, new opportunities manifest in optimizing cross-border payment settlements based on the RMB cross-border payment system, providing more efficient support for “going global” enterprises, and absorbing international advanced experience in cooperation with foreign banks to accelerate internationalization layout and enhance cross-border financial service capabilities. For foreign banks, new opportunities focus on deepening their presence in the Chinese domestic market, achieving breakthroughs in areas such as local public fund custody, and leveraging professional advantages in wealth management, green finance, and cross-border mergers and acquisitions.

Zeng Gang told reporters that for foreign banks, the continued relaxation of entry restrictions means an expanded space for business development in China. Previously restricted sub-sectors such as wealth management, derivatives market making, and insurance asset management will gradually open to foreign capital. Foreign institutions can leverage their international product systems and global asset allocation capabilities to capture larger shares in the high-net-worth individual and institutional client markets. At the same time, the smooth onshore financing channels enable foreign institutions to acquire RMB funds at lower costs, providing financial support for their deep engagement in the Chinese market. Additionally, with policy easing, high-value-added businesses such as cross-border M&A financial advisory and “Belt and Road” infrastructure financing will also see new opportunities.

“This round of opening is not a one-way input but a new journey of mutual empowerment and co-prosperity, injecting lasting momentum into China’s high-quality financial development,” Tian Lihui added. High-level financial opening has opened up three major tracks for Chinese and foreign banks. First, the “pipeline business” of cross-border capital flows; deepening interconnectivity has greatly increased the space for cross-border wealth management, bond issuance, and asset transfer, allowing both sides to jointly provide one-stop configuration services for domestic and foreign investors. Second, the ecosystem for serving Chinese enterprises “going abroad,” which requires integrated services covering cross-border M&A, foreign exchange management, and overseas listings rather than single loans. Only through collaboration can Chinese and foreign banks meet these needs. Third, cross-border collaboration in green finance, with China’s green asset scale leading globally, allows both sides to cooperate deeply in standard recognition and product innovation, collectively promoting Chinese green standards internationally.

Regarding future trends in cooperation between Chinese and foreign banks, Zeng Gang believes that: first, the cooperation areas will extend from traditional bond markets to high-value-added fields such as cross-border derivatives, green finance, and treasury management; second, the cooperation model will evolve from “point collaboration” to “chain collaboration,” with more refined division of labor throughout the project lifecycle; third, as the process of RMB internationalization progresses, the joint layout demand for offshore markets will continue to expand, and the cooperation boundaries will extend to more emerging markets. Overall, the coexistence of competition and cooperation will persist in the long term, but the strategic weight of cooperation is significantly increasing.

“Financial technology is expected to become a new growth point for collaboration, enhancing the intelligence and convenience of financial services through joint exploration of cross-border payment system upgrades and digital RMB applications. As financial market interconnectivity deepens, Chinese and foreign banks will also expand cooperation in various market fields such as bonds and stocks, attracting more foreign investors to participate in the Chinese financial market and jointly promoting the internationalization of China’s financial market,” Xue Hongyan stated.