China's 10-year government bond yield fell to around 1.72% on Thursday, marking a third straight session of declines and touching its lowest level in more than a week. The drop comes as the expanding role of bond financing bolsters the People's Bank of China's efforts to reduce borrowing costs.
The increased emphasis on bond issuance reflects China's broader transition to a high-tech, innovation-driven growth model, in which capital market funding often provides cheaper financing than traditional bank loans. In May, government and corporate bonds made up a record 30% of China's outstanding credit stock.
At the same time, the People's Bank of China has been maintaining ample liquidity in the roughly 200 trillion yuan bond market through various policy operations, helping to keep yields subdued and ease funding conditions across the economy.
Separately, investors are closely monitoring the final session of the Lujiazui Forum for additional policy signals and potential new support measures.
