Financial research firm Gavekal: China's government bonds highlight their safe-haven qualities

Ask AI · How do China’s advantages in trade and electricity support the appeal of sovereign debt?

Beijing News Shell Finance, via reporters Jiang Fan: At present, global markets are turbulent, and international capital is looking for safer assets. Some international institutions have focused their investment attention on China’s government bonds.

Recently, research by the international financial research institution Gavekal found that China’s government bonds have performed resiliently after enduring geopolitical shocks, and are becoming a practical alternative reserve asset.

The report states that China’s long-term government bonds have remained relatively steady in recent years. By contrast, U.S. Treasuries, after accounting for exchange-rate movements and adjustments in gold prices, have looked less competitive.

“Since 2012, Chinese bonds have been one of the few fixed-income markets that have outperformed U.S. inflation.” The report points out that China’s leading position as a world industrial and trade superpower also helps support the appeal of China’s sovereign debt as a global reserve asset.

The report shows that China has already become a major trading power, and that now, in most regions around the world—except for a few—China is the dominant trading partner. At the same time, China is also a global power/electricity superpower: it can produce, transmit, and store electricity at costs far lower than those in other countries. All of these support China government bonds’ “safe-haven” status.

Editor: Chen Li; Proofreader: Mu Xiangtong