Amidst the rising government bond yields in major countries around the world, the trend of the bond yields issued by the Chinese Communist Party (CCP) is contradictory, reflecting the current situation of a sluggish Chinese economy.
On October 8th, the 10-year government bond yield in France rose to 4.897%, reaching its highest level since 2002. This increase has also impacted bond markets in Southern European countries like Italy and Greece, where investors are demanding higher risk premiums, leading to continuous selling of bonds. At the same time, the 10-year government bond yields in the UK have been steadily rising and recently reached 5.515%, marking the highest level since July 2007.
The 10-year government bond yield in Japan has also surpassed 3%, a level not seen since 1996 and the first time this century to touch 3%. In comparison, during the same period last year, this yield was only half of what it is now.
Currently, the United States government bond yields remain at historical highs, with the 10-year yield reaching its highest level since 2002, surpassing 5.3%. The 30-year yield has also crossed 5.7%, marking a new high in 24 years. US Treasury Secretary Scott Bessent recently commented that the rise in bond yields reflects a global trend.
In contrast, the trend of the bond yields issued by the CCP has been decreasing. So far this year, the 10-year government bond yield has been consistently lowering and dropped to as low as 1.7% on October 7th. This yield is more than 3 percentage points lower than the 5.3% yield of the US government bonds at the same term and even lower than the 10-year yields in the UK, France, and Japan.
An analysis article published by the Wall Street Journal on October 8th suggested that the downward trend of China’s government bond yields amidst global increases reflects existing issues in China’s economy. Despite strong external trade exports, factors like weak consumer demand and a prolonged downturn in the real estate sector continue to weigh down other areas of China’s economy.
The article pointed out that low government bond yields would reduce returns for savers, forcing people to save more cash, ultimately dragging down overall consumption. Low yields also signal a dim outlook for economic growth, weakening companies’ hiring and investment intentions, while potentially pushing investors towards riskier assets, thereby destabilizing financial stability.
This year, the People’s Bank of China and other Chinese banks have actually become net buyers of bonds. Due to the economic slowdown leading to weak credit demand, commercial banks have turned to the bond market to expand their asset base. As of August this year, the size of bonds held by the Chinese banking industry has reached over 29 trillion yuan, more than double the holdings in 2022.
Political observer Xia Yan stated that the CCP is facing financial strain and intentionally keeping bond yields low to reduce financing costs for various government levels. A large amount of funds from banks are channeled into CCP government debt, including national and local bonds. Under the directive of the CCP, banks are forced to swallow these “time bombs.”
Xia Yan believes that the CCP’s administrative commands have led to a decline in bank profits and a continuous decrease in net interest margins vital to the health of banks. Simultaneously, financial risks are increasing, with hundreds of banks closing each year, bad debts being taken on by larger banks, and risks gradually concentrating from the bottom up.
Data from China’s National Financial Supervisory Administration showed that in the second quarter of 2026, the net interest margin for regular commercial banks was 1.41%, while for large commercial banks, it was 1.31%. According to the standards set by the People’s Bank of China, the “healthy line” for net interest margin is 1.8%, representing the minimum profit requirement for banks to maintain healthy operations, deal with bad debts, and supplement capital.