FX.co ★ China 10Y Yield Rises Amid Decades-Low GDP Target

China’s 10-year government bond yield climbed to around 1.79% on Thursday, rebounding from a near three-week low earlier in the week, as investors assessed the country’s revised GDP growth target. Beijing set its 2026 GDP growth goal at roughly 4.5% to 5%, the most conservative target since 1991. The modest projection underscores policymakers’ growing willingness to accept slower growth as they pivot the economy toward more sustainable drivers and reduce dependence on debt-fueled property and infrastructure investment. It also highlights Beijing’s acknowledgment that the growth model behind four decades of rapid expansion is now under increasing structural strain. At the same time, the budget deficit is expected to remain at about 4% of GDP, unchanged from 2025, in an effort to support growth amid domestic headwinds and rising geopolitical risks. Fiscal policy is set to take the lead in stimulating the economy, as narrowing bank profit margins and weak credit demand constrain the room for further monetary easing.