Chinese Government Bond Yields Hit Yearly Highs as Economic Signals Improve

Chinese government bond yields climbed to their highest levels of 2025 this week, as investors weighed signs of stabilizing inflation and stronger economic momentum. The benchmark 10-year yield rose to 1.82%, while the 30-year yield reached 2.21%, the highest since late 2024.

The move comes despite consumer prices in August showing continued deflation. Analysts noted that core consumer and producer prices are improving, and factory gate price declines are slowing, suggesting that deflationary pressures may be easing. Some pointed to Beijing’s recent “anti-involution” campaign—measures designed to curb excessive competition and price cutting—as helping restore balance in key sectors.

Equity markets have also benefited from the improving outlook. The CSI 300 index has gained nearly 13% since July, reflecting growing investor confidence in corporate earnings and domestic demand.

Still, market watchers remain cautious, debating whether the bond sell-off reflects genuine confidence in the economy’s recovery or a temporary shift in risk appetite. For now, rising yields and stronger equities underline a turning point in China’s financial markets heading into late 2025.