Huge potential of China's bond market is being tapped through ongoing reforms

On April 1, China's renminbi-denominated central government and policy bank bonds will be added to the Bloomberg Barclays Global Aggregate Index.

This is a new milestone in the country's integration into the global capital markets. After a 20-month phase-in period, China's local currency bonds will be the fourth-largest in the index - after the US dollar, euro, and yen - representing 6 percent of the index.

The potential for the development of China's bond market is large, given that its financial system remains largely bank based and relatively closed. A robust and liquid bond market in turn will benefit the domestic economy and foster global asset diversification.