A STUDY OF THE EVOLUTIONARY DEVELOPMENT PROCESSES AND SYSTEMIC RISKS OF THE CHINESE DEBT MARKET IN THE CONTEXT OF FINANCIAL TRANSFORMATION

Abstract

Introduction. The changing structure of the financial sector and the increasing complexity of economic processes make debt instruments a key element of financial engineering in both the global and Chinese contexts. The article highlights the dual nature of debt instruments: on the one hand, they promote the development of markets and attract financing for specific pro-jects, on the other hand, they carry systemic risks associated with regulatory architecture and transparency. These aspects are particularly important in the context of the transition of the Chi-nese economy to a market model and the increasing role of securitization and the shadow sector in the financial system. Materials and methods. The authors apply a systematic approach to con-sider debt instruments of financial engineering as an element of China's national financial system, closely related to the regulatory environment, macroeconomic policy and the needs of the real sector. The research applied targeted benchmarking to investigate indicators of systemic vulnera-bility in the Chinese debt market, alongside the Risk Waterfall visualization method to analyze inter-sectoral transmission of debt risk in China. Research results. The main results show that over the past decades, China's debt instruments market has undergone a transformation from de-veloping to more mature, significantly integrated into global financial flows. In 2020-2024, the growth of corporate ABS and green bonds is accelerating, regulatory control over the shadow sector is strengthening, and the system is gradually consolidating around more transparent and regulated forms of financing. These trends point to the development of innovative financial in-struments, where the benefits of diversification are combined with the need to increase transpar-ency, disclosure standards, and stress testing of banking and insurance systems. Discussion and conclusion. Regulatory measures aimed at tightening supervision of trust schemes and private placements can minimize the risks of shadow banking, but at the same time require a balance between innovation and financial stability. An important conclusion is the need to continue the transition to more transparent and standardized instruments (corporate ABS, green bonds) and reduce the share of opaque financing channels. The increasing role of China as an exporter of financial innovations in the global South has been revealed, where these instruments serve not only for domestic financing, but also for the formation of strategic economic ties and financial autonomy.