China avoids the global surge in long-bond yields

By Ranping Chen

As global inflation persists and markets fret about fiscal strains in developed markets, US 10-year Treasury yields have climbed above 5%. Their German equivalents yield about 3.5%; Japan’s JGBs, more than 3%. But #China stands apart, with its benchmark yield at about 1.7% and trending lower.

The divergence reflects different growth, inflation and monetary-policy expectations, but also highlights contrasting borrowing conditions. China is struggling to revive borrowing despite cheaper credit; as the Fed raised rates in September, Beijing introduced mortgage subsidies to support homebuyers.

Indeed, Chinese mortgage rates have fallen from 5%-plus in 2021 to around 3% as policy rates were cut, yet household medium- and long-term loan net additions and new-home sales volumes have continued to decline.

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