China's latest efforts to stem a bond market rally shows that authorities are worried about financial stability, analysts said.
"The sovereign bond market is the backbone of the financial sector, even if you run a bank-driven sector like China Europe," said Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis. Zerlina Zeng, head of Asia credit strategy, CreditSights, noted that the PBoC has increased intervention in the government bond market, from increased regulatory scrutiny of bond market trading to guidance for state-owned banks to sell Chinese government bonds.
That contrasts with how in other countries, insurance companies can sell products whose returns can change depending on market conditions and extra investment, he said.