China’s 10-year government bond yield rose to around 1.88%, hitting its highest level since October 2025 even after the PBOC reaffirmed a dovish policy outlook for the year. The central bank reiterated its plans to reduce the reserve requirement ratio and interest rates in 2026 to ensure ample liquidity, while maintaining an “appropriately accommodative” monetary policy. Policymakers also emphasized the importance of stronger counter-cyclical and cross-cyclical adjustments, expanding domestic demand, improving supply efficiency, and containing financial risks to secure stable economic growth and support the launch of the new five-year plan. In December, the PBOC kept benchmark loan prime rates steady for the seventh consecutive month, following a 10 bps cut in May. Meanwhile, the central bank bought around 50 billion yuan of government debt in December, marking the third consecutive month of net purchases as authorities sought to stabilize liquidity.