China’s central bank is quietly pulling back from the bond market, and the numbers tell the story. The People’s Bank of China reduced its net government bond purchases through open-market operations to just 10 billion yuan in June 2026, marking the lowest monthly injection in nine months.
The mechanics of a monetary slowdown
The pullback became unmistakable on June 2, when the PBOC executed its smallest daily open-market operation on record. The central bank lent just 200 million yuan through seven-day reverse repos. For context, that’s roughly $27 million, a rounding error for the world’s second-largest economy.
Chinese benchmark bond yields dropped to their lowest level since August 2025 during early June, driven by a bond rally that pushed prices up and yields down.
The PBOC’s bond-buying program in the secondary market launched back in August 2024. It was an aggressive move designed to support the economy through direct market participation. But the program hit a speed bump in January 2025 when surging demand and record-low yields forced a pause.
