Last week, China reached an important milestone in the long process of opening its financial markets to the world, as the renminbi was added to those currencies that make up an artificial currency designed as a back-up for the global financial system.

While the decision to add the renminbi to the International Monetary Fund’s Special Drawing Rights basket could be seen as a political move, with relatively little impact on daily life in Chinese fixed income markets, it is likely to be an inflection point in overseas fund managers’ accelerating attempts to gain access to those markets.

Entering China’s onshore fixed income market is a complicated process. The initial licence for an RQFII (renminbi qualified foreign institutional investor) quota gives access only to the small pool of bonds traded on exchanges. Trading in the much larger interbank bond market (IBB) requires a further application for permission to the People’s Bank of China.