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A wave of new bond exchange-traded funds (ETFs) is propelling a fresh surge of investment into China’s high-tech and artificial intelligence sectors, as money managers respond to a growing appetite for yield-bearing assets in the wake of deposit-rate cuts.
Ten major Chinese asset managers—including E Fund Management, China Southern Asset Management, and Invesco Great Wall Fund—have submitted applications to launch corporate bond ETFs, nearly doubling the total number of such funds in China to 21, according to Huaxi Securities.
These ETFs will invest in so-called science and technology innovation bonds, a debt category introduced earlier this year that has already raised 374.8 billion yuan (US$52.2 billion). The move aligns with Beijing’s broader strategy to accelerate technological self-reliance and counter U.S. export restrictions amid intensifying competition in AI and semiconductors.
“Fixed income ETFs remain a small but rapidly growing segment,” said Emily Gao, head of research at consultancy Z-Ben Advisors. “Strong inflows and robust investor interest make now an opportune time to expand offerings.”
Assets in Chinese bond ETFs have doubled over the past six months, surging from 180 billion yuan to 360 billion yuan. In total, there are now 29 fixed-income ETFs trading in China.
Analysts say the appeal lies in the ETFs’ liquidity, risk transparency, and collateral utility—factors especially attractive to investors moving away from traditional bank deposits. Yet, the popularity comes at a cost: average yields on AAA-rated three-year corporate bonds have fallen nearly 40 basis points since March to 1.81%, edging close to historic lows.
“The rise of credit ETFs reflects growing demand for stability and transparency, particularly from conservative investors,” said Aaron Ni, head of Asian fixed income at Aberdeen Investments.
International firms are also tapping into the trend. Last month, Global X launched its first China-dedicated ETF—tracking 20 tech-focused A and H-share firms—while Betashares unveiled a suite of defined-maturity corporate bond ETFs targeting income, diversification, and clarity.
As China’s innovation ambitions intersect with a maturing bond market, fixed-income ETFs are fast becoming the new frontier for investors seeking exposure to the country’s tech transformation.
