China’s sovereign debt is becoming a strategic alternative to US Treasuries: economist

South China Morning PostEN 1 min read 100% complete by Xinyi WuMarch 4, 2026 at 09:00 AM

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A Chinese economist suggests China's sovereign debt is becoming a strategic alternative to US Treasuries for global investors seeking geopolitical hedges. According to Xu Qiyuan, these bonds circumvent renminbi convertibility restrictions, possess high credit and liquidity, and minimize risks associated with US financial systems. This comes amid discussions in China about capitalizing on wavering confidence in the US and its currency, an issue expected to be discussed at the upcoming "two sessions." Xu cites strong demand for China's dollar-denominated sovereign bonds as evidence of this trend, driven by diversification efforts and a shortage of high-quality liquid assets. However, increased market liquidity and yuan internationalization are needed for China's debt to become a true global safe haven.

Key Entities & Roles

Key Player Opposition Context

Hong Kong 40% Beijing 50% Chinese Academy of Social Sciences 60% Xu Qiyuan ×370% United States ×380% China ×390%

Keywords

sovereign debt 100% us treasuries 90% china 90% geopolitical hedges 80% yuan internationalisation 70% market liquidity 60% safe haven 60% us dollar 50% renminbi 50% asset allocation 50%