China’s 10-year government bond yield dropped to 1.70% on Thursday, as investors shifted toward safer assets amid disappointing PMI data and rising US-China trade tensions. A private survey revealed that China’s composite PMI fell to its lowest level in two and a half years. The downturn was largely attributed to weakness in the manufacturing sector, which overshadowed continued strength in services activity. Meanwhile, uncertainties surrounding US-China trade relations grew after President Donald Trump emphasized the need for direct talks with Chinese President Xi Jinping to prevent further deterioration in trade and technology ties. However, Xi has remained firm, insisting on substantial concessions before entering negotiations—an approach that has become a growing source of frustration for Trump. Moreover, tensions intensified over Beijing’s reluctance to relax its restrictions on rare earth exports and its accusation that Washington is obstructing access to advanced technologies.