Property stimulus plans, Japanification of the bond market

Policymakers are mulling a new property stimulus package, including mortgage subsidies for new homebuyers. But this is unlikely to revive demand, as most households remain reluctant to buy in a falling market.

China’s 10-year bond yield dropped below Japan’s for the first time since China's bond pricing was liberalised in the mid-1990s. We expect it to decline further as deflation persists and the PBOC steps up bond purchases alongside wider monetary easing.