Market Summary

Yield Movements

The local currency government bond yield curve of the People’s Republic of China (PRC) steepened between 3 November and 6 February on falling yields. Yields fell for most tenors in the PRC over weak inflation data and increased liquidity from the central bank. Yields fell an average of 4 basis points for the 8-year tenor and below, excluding the 3-month and 5-year tenors as consumer price inflation fell to 0.2% year-on-year (y-o-y) in January from 0.8% y-o-y.  In addition, the People’s Bank of China added liquidity to financial markets via reverse repos and medium-term lending during the review period.

Local Currency Bond Market Size and Issuance

The PRC’s bond market expansion decelerated slightly in the fourth quarter of 2025, with the stock of outstanding bonds reaching CNY174.7 trillion, as the government had already completed most of its funding in previous quarters. The local currency bond market’s expansion moderated to 2.2% quarter-on-quarter (q-o-q) in the fourth quarter of 2025 from 3.4% q-o-q in the previous quarter. Slower gains were seen mostly in the government bond market over a decline in government issuance, which fell 22.6% q-o-q.

Sustainable Bond Market

The PRC’s sustainable bond market reached a size of USD409.4 billion at the end of 2025, representing 53.5% of emerging East Asia’s sustainable bond total. The rate of market expansion ticked up to 10.5% y-o-y in 2025 from 6.8% y-o-y in 2024, supported by strong issuance of USD147.8 billion, which comprised 64.0% of the regional total.