OpinionThinking About China

The Rally in China Bonds Says Bad Things About the CCP’s Economy

Chinese government bonds have rallied, pushing yields to near record lows. This reflects widespread pessimism about the country’s economic prospects.
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The Rally in China Bonds Says Bad Things About the CCP’s Economy
A man rides his bicycle past the People's Bank of China in Beijing on Aug. 12, 2015. Wang Zhao/AFP/Getty Images
Milton Ezrati
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Commentary

Chinese investors are pouring money into government bonds. They have bid up prices that, in the way of bond math, have brought yields down to near-record lows. The move has upset People’s Bank of China (PBOC) authorities, who have expressed considerable concern over what will happen to China’s financial stability when the rally reverses and people, especially banks, suffer losses.

Milton Ezrati
Milton Ezrati
Author
Milton Ezrati is a contributing editor at The National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, a New York-based communications firm. Before joining Vested, he served as chief market strategist and economist for Lord, Abbett & Co. He also writes frequently for City Journal and blogs regularly for Forbes. His latest book is "Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live."