FINANCE

Overseas Investors Drawn to Stability of Chinese Bonds

Published: Aug. 18, 2025 8:11 p.m. GMT+8

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Foreign investors are stepping up purchases of onshore Chinese bonds, drawn by their relatively stable returns, an executive at UBS Group AG’s asset management arm said.

The trend emerged last year, and has grown prominent this year as U.S. tariff policy has cast a cloud over the economic growth prospects of the U.S. and the rest of the world, prompting many to consider non-U.S. dollar assets, said Raymond Gui, head of Asian fixed income at UBS Asset Management.

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Foreign investors increased purchases of onshore Chinese bonds, attracted by stable returns and less volatility compared to U.S. and European markets.
Foreign-held Chinese bonds surpassed $600 billion, roughly 2% of all yuan-denominated bonds, with preference for government and policy bank bonds.
The volatility rate in China’s bond market is around 2%, significantly lower than the 6–8% seen in the U.S. and Europe, offering portfolio stability.

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Who’s Who

UBS Group AG: UBS Group AG's asset management arm sees increased foreign investor interest in onshore Chinese bonds, driven by stable returns and a search for non-U.S. dollar assets. Raymond Gui, head of Asian fixed income at UBS Asset Management, noted this trend, highlighting the substantial growth potential given foreign holdings represent only a small fraction of the total yuan-denominated bonds.

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What Happened When

April (year not specified)：: U.S. President Donald Trump announced 'reciprocal tariffs,' after which the yields of China’s central government bonds have remained in a very narrow range.

2023：: Foreign investors began significantly increasing their allocation to corporate and other non-sovereign Chinese bonds, including bank-issued negotiable certificates of deposit (NCD).

2024：: The trend of foreign investors stepping up purchases of onshore Chinese bonds emerged.

2025：: The trend of increased foreign purchases of onshore Chinese bonds became more prominent.

July 2025：: The State Administration of Foreign Exchange published figures showing outstanding onshore yuan-denominated bonds held by foreign investors surpassed $600 billion.

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