China's 30-Year Bond Yields Rise Amid Global Selloff and Easing Trade Tensions

China's 30-year government bonds have fallen 0.7% in futures and are on track for a sixth straight session of losses. Yields have risen 1 basis point to 1.92%, suggesting easing pessimism towards the domestic growth outlook. Easing US trade tensions and Beijing's efforts to tackle deflation have dampened demand for the notes.

Title: China's 30-Year Government Bonds Fall Amid Easing Trade Tensions and Deflation Efforts

China's 30-year government bonds have experienced a significant decline, with futures dropping by 0.7% and on track for a sixth consecutive session of losses. Yields on these bonds have risen by one basis point to 1.92%, indicating a potential easing of pessimism regarding the domestic growth outlook [2].

The recent downturn in Chinese debt is part of a broader global selloff in longer-dated bonds. Easing U.S. trade tensions and Beijing's ongoing efforts to combat deflation have contributed to the reduced demand for these notes. The global selloff, driven by fears of larger fiscal deficits in major markets like Japan and the U.S., has now spilled over into Chinese debt [2].

Investors initially shrugged off the global bond selloff, betting on further policy easing from Beijing to combat deflation. However, the focus has shifted to the Chinese government's anti-involution drive aimed at curbing oversupply in industrial products and boosting prices. This campaign, while reducing the risk of prolonged deflation and interest-rate cuts, may not be as effective as earlier efforts seen between 2015 and 2016 [2].

The latest rise in yields also signals concern over additional debt supply from the government's efforts to increase spending and boost the economy, despite higher-than-expected growth in the second quarter [1]. The launch of a 1.2 trillion yuan ($167 billion) mega-dam project in Tibet is expected to provide economic support, particularly to sectors like construction, cement, and steel [1].

US Treasury Secretary Scott Bessent is set to meet with Chinese counterparts in Stockholm next week for the third round of talks aimed at extending the tariff truce and widening discussions. This could further boost investor confidence and encourage a rotation from bonds to equities, potentially pushing 30-year yields higher towards 2% by August [2].

References
[1] https://www.bloomberg.com/news/articles/2025-07-21/china-s-longer-bonds-fall-on-bets-mega-dam-may-support-economy
[2] https://www.bloomberg.com/news/articles/2025-07-23/china-s-long-bonds-join-global-drop-as-us-trade-tensions-ease