Can China use widening yield gap between the US dollar and yuan to boost global role?
Por Daisy Wu — South China Morning Post – News feed
Advertisement Yuan Business Banking & Finance Can China use its widening US yield gap to boost the yuan’s global role?
Beijing could leverage the yuan’s low interest rate to increase the currency’s worldwide use, an expert says
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Daisy Wu Published: 11:00am, 9 Oct 2026 Updated: 11:52am, 9 Oct 2026 China should seize a window opened by the widening US-China yield gap to strengthen the financing, hedging and asset-absorption systems behind the yuan, turning its cyclical low-interest-rate advantage into lasting global use of the currency , according to a researcher from a Beijing-based governmental think tank.
The 10-year US Treasury yield was 5.22 per cent on Thursday, compared with 1.69 per cent for Chinese government bonds on their first trading day after the National Day holiday – a gap of about 3.5 percentage points, compared with a record 3.7-percentage-point gap on September 9.
Jiang Zhenlong, an associate research fellow at the Chinese Academy of Social Sciences’ Institute of Finance and Banking, argued that higher US yields weakened the appeal of yuan assets and added pressure on the exchange rate and capital flows, but also raised dollar funding costs.
“The China-US yield inversion presents an asymmetric effect: pressure on the asset allocation side and benefit on the financing side,” he wrote in the latest issue of China Money Market, a central bank-affiliated magazine.
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