Market Summary

Yield Movements

The People's Republic of China's (PRC) yield curve mostly declined between 1 September and 31 October. Yields fell an average of 2 basis points (bps), with most declines occurring at the middle to longer end of the curve (excluding the 10-year and 30-year tenors). Most economic indicators released during the review period showed a weakening economy. Third quarter GDP growth softened to 4.8% year-on-year from the second quarter's 5.2% year-on-year gain.

Local Currency Bond Market Size and Issuance

The PRC's local currency bond market maintained its growth momentum in the third quarter of 2025 with total bonds outstanding reaching CNY170.9 trillion. The market expanded 3.4% quarter-on-quarter (q-o-q) only slightly lower than the previous quarter's 3.5% q-o-q gain. The stock of government bonds continued to expand amid local government refinancing to manage debt levels and efforts to stimulate the domestic market through government expenditures. Corporate bond activity was evident in capital-raising via financial bonds amid the central government's efforts to boost industrialization by calling on banks to increase lending.

Sustainable Bond Market

Driven by issuance to support ongoing decarbonization efforts, the PRC's sustainable bonds outstanding rose 4.5% q-o-q to USD404.4 billion at the end of September, of which green bonds comprised 86.1%. The large share of green bonds in the PRC's sustainable bond market is mostly due to government initiatives. At the PRC's Fourth Plenum in October, where the government discussed development plans for 2026-2030, sustainability remained a key consideration