China’s 10-year government bond yield climbed to around 1.84% on Monday, extending the previous week’s gains as surging oil prices linked to the war with Iran stoked inflation concerns. Now in its fourth week, the conflict has intensified, with President Trump and Iran exchanging escalating threats and Israel signaling plans for “weeks” of additional fighting, unsettling global financial markets.
Last week, the People’s Bank of China left key interest rates unchanged, underscoring a cautious policy stance amid mounting external risks and suggesting limited scope for further monetary easing. Despite these external shocks, some analysts argue that China’s economy remains underpinned by relatively resilient domestic conditions. They also note that China retains buffers to absorb higher energy costs and may even gain from increased global demand for green energy exports.
At the same time, Chinese officials used the China Development Forum to reaffirm policy continuity and a commitment to further opening the economy. Premier Li Qiang pledged greater market access for foreign companies and a more balanced trade relationship with global partners.
