Taking the ten-year treasury bonds as an example, a few years ago, the interest rate of ten-year RMB treasury bonds was 4%, and that of ten-year USD treasury bonds was 2%, with a margin of 200 basis points, which was large. Now, the former has fallen to around 3.3%, and the latter has risen to around 2.9%.
Despite a positive margin, the RMB treasury bonds were only moderately higher in rate than their USD counterparts, where the margin narrowed from 200 basis points to 40 basis points. This actually has significant meanings in that people are weighing the pros and cons in holding USD-denominated assets or RMB-denominated ones. How can cross-border capital flow keep balanced given the current situation?