FTSE Russell, a global multi-asset index provider, announced that it will add Chinese government bonds to its flagship World Government Bond Index on Sept 25. The CGBs will be included in the index from October 2021, pending an affirmation on March 2021, according to the statement, thepaper.cn reported.

The inclusion marks a major step of the opening of China's bond market. It will also make Chinese yuan the fourth-largest currency used in bond denomination after the US dollar, euro and Japanese yen.

WGBI is a broad index providing exposure to the global sovereign fixed income market. The index measures the performance of fixed-rate, local currency, and investment-grade sovereign bonds. It comprises sovereign debt from over 20 countries, denominated in a variety of currencies, according to FTSE Russell, which is owned by the London Stock Exchange Group.

China's government bonds are already a part of the JPMorgan and Bloomberg Barclays index suite.

The Citibank estimated that the full inclusion will attract around $120 billion of foreign inflows into China's bond market based on an estimated weighting of 5.7 percent, said the report.