For the first time, China’s long-term interest rates have fallen below Japan’s

China’s long-term interest rates have fallen below Japan’s for the first time. Influenced by the fiscal expansion policies of the Sanae Takaichi government, Japan’s interest rates have risen, while China’s interest rates have remained at historically low levels. China faces deflationary pressures, and expectations of further interest rate cuts by the central bank have kept interest rates stable at low levels. This reversal in long-term interest rates between China and Japan suggests that the Chinese economy may follow Japan’s path, becoming a risk to the global economy.

Data from the UK’s LSEG shows that the yield on Japanese 10-year government bonds rose to 1.84% in the latter half of last week (due to a decline in bond prices). China’s 10-year government bond yield remained around 1.83%, with Japanese government bond yields higher than Chinese yields.

The 10-year government bond yield is positioned as an indicator of long-term interest rates. This marks the first reversal in long-term interest rates between China and Japan since September 2000, when comparable data became available.