China’s 10-year government bond yield fell to around 1.65% on Thursday, hitting its lowest level since May 2025, as a strengthening yuan and lackluster economy bolstered demand for Chinese sovereign debt. The yield has declined 18 basis points since the end of December, while Chinese bonds have delivered nearly 10% returns over the past 12 months for dollar-based investors. Chinese bonds have also benefited from the country’s relative insulation from rising oil prices, supported by substantial strategic reserves and the continued shift toward electrified transport. Beijing’s efforts to attract more foreign investors to its domestic bond market are providing another source of support as China seeks to expand the yuan’s international role. The rally has widened the yield gap between Chinese and US government bonds to a record this month, with China’s 10-year yield at 1.67%, 352 basis points below that of comparable-maturity US Treasuries.