The full shift to a registration-based offering will have an encompassing impact on China’s capital market. However, the existing literature does not answer whether the deregulation of bond market issuance review and the shift to a registration system alleviate or exacerbate the information asymmetry problem in the bond market. This paper extends the classical model of Bolton, Freixas, and Shapiro (2012) to construct a signaling game model under monopolistic competition that fits the characteristics of the Chinese bond market and proves that the rating inflation separation equilibrium holds under the registration system. By exploiting the transformation of the offering institution to He-Zhun (examine and approve) in China corporate bond market, which is a segment of the overall China bond market, the paper tests the hypothesis that the market reform process will lead to rating inflation. Our empirical strategy is constructed by accurately matching the treated group of corporate bonds and the control group of medium-term notes with the same Industrial and Commercial Registration Number. Our findings support the theoretical result of the separation equilibrium in rating inflation under the registration system. Our evidence indicates that the monopoly rater inflates ratings to cater to AAA bonds, while other raters inflate ratings for lower-rated bonds. The issuer increases private information hiding. Based on the information asymmetry in the bond market, this paper test the policy effect of the registration-based offering of bond market and provides empirical evidence for improving the supporting system of the bond market registration-based system.