In March 2015, the policy makers of China made an official statement regarding the bond defaults, which broke the rigid payment practice of China’s bond market since 1987.?Taking the listed firms with credit rating of AA-, AA and AA+?as treated groups, we construct a difference-in-difference model to investigate the effect of breaking the rigid payment in bond market on firms’ R&D investment. We find that the breaking event?causes treated?firms to cut R&D activities.?Path analysis documents that treated firms reduce R&D investment due to severe financial constraints followed the event. We argue that treated firms learn from the credit spread change in the bond market, and provide evidence that the effect is more pronounced when getting similar financing information from banks are difficult. To control the alternative explanation of primary bond market, we divide the sample according to the pressure of issuing new bonds but not find significant difference between two sub samples. Overall, we provide evidences that firms react to the price changes in China’s bond market, suggesting a comprehensively deepening but balanced reform of the financial markets.