Multinational companies are flocking to China’s bond market at a record rate as they try to secure cheaper financing and hedge against deteriorating relations between Beijing and the US. So-called panda bond issuance — renminbi borrowing by overseas companies in mainland Chinese markets — hit Rmb194.8bn ($26.5bn) in 2024, the highest level on record for a full year. In the first quarter of this year it reached Rmb41.6bn, its second-best quarterly issuance since the World Bank and Asian Development Bank sold the first such bonds in 2005. Mercedes-Benz, HSBC and Trafigura are among the foreign groups that have driven the wave of fundraising. Many companies are keen to take advantage of Chinese interest rates that are much lower than those elsewhere, for instance in the US and Europe. The issuance marks a shift in strategy by global companies to issue debt for their China subsidiaries locally, rather than raising funds abroad and then transferring the money to their Chinese unit. Analysts say this so-called “in China for China” strategy could help foreign groups reduce transaction costs — or even hedge against potential financial restrictions on their local units if the US-China trade war escalates.