China’s 10-year government bond yield has climbed to approximately 1.88%, marking its highest point since October 2025. This increase comes despite the People's Bank of China (PBOC) reaffirming its dovish policy stance for the year ahead. The central bank has reiterated its intention to lower the reserve requirement ratio and interest rates in 2026, aiming to ensure sufficient liquidity while maintaining a “moderately accommodative” monetary policy. Policymakers have also highlighted the need for stronger counter-cyclical and cross-cyclical adjustments, boosting domestic demand, enhancing supply efficiency, and managing financial risks to ensure stable economic growth and support the implementation of the new five-year plan.
In December, the PBOC kept the benchmark loan prime rates unchanged for the seventh consecutive month, following a 10 basis point reduction in May. Additionally, the central bank purchased approximately 50 billion yuan of government debt in December. This marks the third successive month of net acquisitions as authorities strive to maintain liquidity stability.
