FX.co ★ China 10Y Yield at Over 1-Year Low

China’s 10-year government bond yield fell to around 1.65% on Thursday, its lowest level since May 2025, as a strengthening yuan and a sluggish domestic economy boosted demand for sovereign debt. The yield has dropped 18 basis points since the end of December, and over the past 12 months Chinese government bonds have generated nearly 10% returns for dollar-based investors. They have also been supported by China’s relative insulation from rising oil prices, underpinned by sizable strategic reserves and an ongoing shift toward electrified transportation. In addition, Beijing’s initiatives to attract more foreign participation in its onshore bond market are providing further backing as China works to enhance the yuan’s international role. The rally has pushed the yield differential between Chinese and US government bonds to a record this month, with China’s 10-year yield at 1.67%, standing 352 basis points below that of comparable-maturity US Treasuries.