Financial research firm Gavekal report: Chinese government bonds are gradually becoming reserve assets

Recently, a report released by Gavekal, a financial research institution headquartered in Hong Kong, said that China’s government bonds have performed steadily in recent years and are gradually becoming a viable alternative reserve asset, which could weaken the positions of gold and U.S. Treasury bonds.

The report noted that since 2012, investing in China’s government bonds has been one of the few ways global market bond investors have managed to outperform U.S. inflation. All other major bond markets have generated significant real losses; in some markets, such as Japan, Germany, and the UK, nominal returns were even negative over these 14 years.

What reasons does the global market have for viewing China’s government bonds as a potential reserve asset? In response, the report analyzes that first, China has firmly maintained its position as a leading global industrial power, laying a solid industrial foundation for renminbi assets; second, China’s advantages in global trade continue to stand out; third, China has built long-term comparative advantages in the power sector; and fourth, persistent trade surpluses provide strong fundamentals for the renminbi exchange rate and asset prices.

“China produces more electricity than any other country and at lower cost. If in the future the ‘fuel’ is electricity, then China can generate, transmit, and store electricity at a cost far lower than other countries—this is clearly a comparative advantage. In addition, China’s trade surplus in 2025 is roughly equivalent to Saudi Arabia’s GDP from the previous year.” The report believes that these factors together support China government bonds’ “safe-haven” status.

Source: Financial Times Client Edition

Reporter: Ma Ling

Editor: Yang Jingyi