Why are international institutions focusing their investment attention on Chinese government bonds?

Recently, influenced by international geopolitical conflicts and inflation expectations in major overseas economies, the global bond market has experienced intense volatility, with yields on many countries’ government bonds rising sharply. In this context, Chinese government bonds have once again become a focus of discussion among international institutions due to their steady performance and lower volatility.

Why are international institutions focusing their investment attention on Chinese government bonds? I believe there are three main reasons.

First, against the backdrop of global bond market turbulence, Chinese government bonds have maintained steady performance, highlighting their role as a “stabilizer.”

Recently, global bond markets have experienced significant fluctuations. Wind data shows that, as a benchmark for traditional safe-haven assets, U.S. Treasury bonds saw their 10-year yield peak at 4.48% on March 27, the highest since July last year. On February 27, the 10-year U.S. Treasury yield was 3.95%, and within less than a month, it rose noticeably. From the bond market perspective, rising yields mean falling bond prices. The fundamental reason for the rapid increase in yields is the concentrated selling of bonds by investors. Besides U.S. Treasuries, yields on government bonds in several European countries have also risen significantly, as investors sell equities and bonds, reflecting a strong risk-averse market sentiment.

In stark contrast to the sharp fluctuations in the global bond markets, Chinese government bonds have remained relatively stable. The 10-year government bond yield recently hovered around 1.84%, only slightly higher than the end of February, with overall yield movements being moderate and low in volatility.

Second, China’s bond market benefits from a stable policy environment.

The People’s Bank of China has maintained a supportive monetary policy stance, creating a favorable monetary and financial environment for stable economic growth, high-quality development, and smooth functioning of financial markets.

In contrast, some major overseas central banks have experienced policy reversals amid rebounding inflation expectations. Market expectations of Federal Reserve rate cuts have weakened, and there are concerns about rate hikes. Coupled with the continuous rise in the U.S. federal debt ceiling, these factors have accelerated some central banks and institutional investors’ “de-dollarization,” which has been a recent trigger for volatility in the global bond market.

Third, with the orderly advancement of the internationalization of the Renminbi, the demand from international investors for Renminbi assets continues to grow, further increasing the attractiveness of Chinese government bonds.

Data shows that both China’s stock and bond markets rank second globally, with market depth, resilience, and liquidity continuously improving. By the end of 2025, overseas institutions and individuals will hold more than 10 trillion yuan in domestic stocks, bonds, deposits, and loans. Meanwhile, the progress of Renminbi internationalization has provided more diverse currency options for domestic and foreign entities. Currently, the cost of Renminbi financing remains relatively low. In 2025, the issuance of Panda bonds by governments, international development agencies, financial institutions, and large enterprises exceeded 170 billion yuan, with offshore Renminbi bonds issued in Hong Kong being even larger.

Additionally, in February this year, the Ministry of Finance issued the first tranche of 14 billion yuan of 2026 government bonds in Hong Kong, which was highly popular among investors, with a subscription multiple of 3.94 times. These data clearly demonstrate international capital’s recognition of China’s sovereign credit and serve as real evidence of the market’s strong demand for Renminbi government bonds.

Looking ahead, as China’s economy continues to develop with high quality and its financial industry deepens its high-level opening-up, the global attractiveness of Chinese government bonds will continue to strengthen, providing international capital with a stable force to navigate cycles.