Global Markets: Chinese government bonds gain global appeal as investors seek diversification amid market volatility

Chinese government bonds are gaining traction among global institutional investors, including sovereign wealth funds and central banks, due to their low correlation with Western bond markets and resilience amid rising sovereign yields in the US, UK, Europe, and Japan. Benchmark Chinese 10-year yields have fallen to around 1.75%, supported by subdued inflation, accommodative PBoC policy, and strong domestic savings. Foreign investors turned net buyers of onshore yuan bonds in May 2025, with institutional holdings rising to 3.21 trillion yuan, marking the first monthly inflow since April 2025.