Jiang Zhenlong, an associate research fellow at the Chinese Academy of Social Sciences’ Institute of Finance and Banking, stated that China should seize the opportunity presented by the widening US-China yield gap. He suggested strengthening the yuan's financing, hedging, and asset-absorption systems to transform its cyclical low-interest-rate advantage into lasting global use.
On Thursday, the 10-year US Treasury yield was 5.22%, while Chinese government bonds offered 1.69% on their first trading day after the National Day holiday, resulting in a gap of approximately 3.5 percentage points. Jiang noted that while higher US yields weaken the appeal of yuan assets and add pressure on the exchange rate and capital flows, they also increase dollar funding costs, creating an asymmetric effect with pressure on asset allocation but benefits on the financing side.