Chinese assets become safe havens amid US-Iran conflict, with the Renminbi cross-border payment system exceeding 1.2 trillion yuan in a single day

Ask AI · How the U.S.-Iran conflict reshapes the global asset safe-haven landscape?

Reporter from the Daily Economic News: Lan Suying Editor from the Daily Economic News: Wang Qiqi

Oil is up, everything else is down.

Since the U.S. launched a military strike against Iran on Feb. 28, almost all categories of global assets—global stock markets, gold, U.S. Treasuries, and Japanese government bonds—have suffered significant declines and sell-offs.

When the safe-haven function of traditional safe-haven assets represented by U.S. Treasuries failed, global investors have increasingly turned their allocation focus to China.

Over the past month, not only have China’s government bond yields remained stable, but the renminbi has strengthened against the trend.

At the same time, the renminbi’s role in cross-border payments has also improved markedly. In March, the average daily transaction value on the Cross-Border Interbank Payment System (CIPS) reached RMB 920.5 billion, the highest level in the past 12 months; and on April 2, the transaction value rose further to RMB 1.22 trillion in a single day.

Standard Chartered Bank told reporters from the Daily Economic News (hereinafter referred to as Daily Economic News reporter) that in the short term, some Middle East funds have already flowed into the Chinese market.

Renminbi-denominated assets are becoming the new “haven” amid this Middle East crisis.

U.S. Treasuries saw sell-offs of more than $90 billion in five weeks; renminbi bonds are getting hot demand

According to data from the Federal Reserve, since the week before the outbreak of the U.S.-Iran conflict, foreign official institutions have net sold U.S. Treasuries for five consecutive weeks, with cumulative sell-offs reaching $9.09 billion. The custody holdings of U.S. Treasuries—which serve as an indicator of foreign official demand—have fallen to the lowest level since 2012.

As of Feb. 18, 2026, the value of U.S. Treasuries held by foreign accounts at Federal Reserve Banks stood at $2.803 trillion. By March 25, that figure had fallen to $2.712 trillion.

A U.S. Bank interest-rate strategist, Meghan Swiber, said bluntly that Middle East oil-exporting countries may be one of the key sources of the U.S. Treasury sell-off this time. The share of U.S. Treasuries held by Middle East oil-exporting countries is about 3.5% of the total, slightly above $300 billion. Saudi Arabia is one of the major Middle East oil-exporting countries that hold U.S. Treasuries.

Brad Setser, a senior fellow at the Council on Foreign Relations, noted that oil-importing countries such as Turkey and India and Thailand are also major contributors to the U.S. Treasury sell-off. Since Feb. 27, Turkey’s central bank has cut back holdings of foreign government bonds by about $22 billion from foreign exchange reserves, with the vast majority being U.S. Treasuries.

Foreign sell-offs have pushed up U.S. Treasury yields significantly. As of 7:00 p.m. Beijing time on April 3, the yield on the U.S. 10-year Treasury has jumped by about 37 basis points since the outbreak of the U.S.-Iran conflict to 4.321%.

Besides U.S. Treasuries, yields on major government bonds such as those of the United Kingdom, Germany, and Japan have also risen sharply during the U.S.-Iran conflict.

Wang Xinjie, Chief Investment Strategy Officer in the China Wealth Solutions division of Standard Chartered Bank, told Daily Economic News reporter: “Rising global inflation expectations make it difficult for monetary easing in the United States and other developed markets to be sustained. In an environment where global fiscal policy is also ‘stretched,’ the room for monetary easing is insufficient, which further leads to rising yields, including on U.S. Treasuries, and increased volatility in global stock markets.”

Unlike the violent fluctuations in bond markets globally, China’s government bond yields have moved relatively steadily: since the outbreak of the U.S.-Iran conflict, the yield on the 10-year Treasury has risen only slightly by 1.4 basis points; as of 7:00 p.m. on April 3, it stood at 1.835%, becoming a rare stable asset in the global market.

The offshore renminbi bond market is also seeing a surge in subscriptions.

On March 5, the Hong Kong Monetary Authority reopened the tender for one-year renminbi special administrative region government-institution bonds. The tender results showed that the issuance size of this bond was RMB 1.0 billion, the total amount of subscription applications was RMB 8B, and the subscription multiple was as high as 11.40 times, with strong market demand. In terms of pricing, the average winning price for this bond was 100.18, corresponding to an annualized yield of 1.358%. With extremely high subscription volume under a low yield, it fully reflects international investors’ strong allocation demand for offshore renminbi bonds.

On the same day, the Hong Kong Monetary Authority also reopened tenders for five-year renminbi special administrative region government-institution bonds, which were likewise warmly received by the market. The issuance size was RMB 1.25 billion, the total amount of subscription applications was RMB 12.2k, and the subscription multiple was 8.70 times. The average winning price was 101.27, with an annualized yield of 1.661%.

Wang Xinjie told Daily Economic News reporter that, “From historical experience, when Middle East countries face geopolitical risks, they will seek more diversified and longer-term regional allocations to better withstand risks.”

Jacky Tang, Chief Investment Officer for Emerging Markets at Deutsche Bank’s International Private Bank division, explained to Daily Economic News reporter: the Iran–Strait of Hormuz crisis is a supply-driven inflation shock, not a demand shock. It raises the inflation risk premium, leading to greater volatility in real yields, thereby weakening the performance of traditional safe-haven assets such as U.S. Treasuries and gold. The divergence in the走势 of China and U.S. Treasuries reflects that traditional safe-haven assets’ pricing is failing, while China’s assets have completed a new round of revaluation under policy anchoring.

CIPS March average daily transaction value hit a peak in the past 12 months

In the FX market, the renminbi has also shown strong resilience.

During the one-month period up to April 3, the U.S. Dollar Index strengthened in stages, while currencies of developed economies such as the euro, Canadian dollar, Swiss franc, Japanese yen, and Korean won faced pressure overall. Among them, the KRW/USD exchange rate once fell below the 1530 level. The Japanese yen exchange rate was very weak; on March 27, it fell below the 160 integer level. Even the traditional “safe-haven currency” Swiss franc did not show a clear advantage—against the U.S. dollar it fell by 2.06%.

But during this period, the renminbi became the only major currency that appreciated against the U.S. dollar; as of 7:00 p.m. on April 3, it was 1 USD to 6.8842.

Behind the stable exchange rate is the renminbi’s growing role in global payments.

According to data on the website of the Cross-Border Interbank Payment System Co., Ltd., the Cross-Border Interbank Payment System (CIPS) processed the highest transaction value in March in the past 12 months, with an average daily transaction scale of RMB 920.5 billion; the number of transactions was 35.74k, up sharply from 61.97 billion RMB and 28.03k transactions in February.

On a single day, April 2, the transaction value rose further to RMB 1.22 trillion, and the number of transactions also reached nearly 42k.

Three structural advantages make Chinese assets a new “haven”

Chinese assets can become a global haven mainly due to three structural advantages: energy security, policy stability, and solid economic fundamentals.

Tang Zhijie analyzed for Daily Economic News reporter that China has a mature policy framework for energy security. Not only is domestic coal supply abundant, but its oil and gas import channels also cover diversified regions such as Russia and Central Asia, and strategic oil reserves can support more than 100 days.

Unlike Japan and South Korea, whose dependency on energy imports is as high as 80% to 95%, the diversification of China’s oil and gas sources allows China to reduce supply-chain shocks to the minimum.

Moreover, China’s large renewable energy system has also greatly diluted the rise in fuel costs. Data show that renewable and substitute energy sources such as nuclear power, wind power, solar power, and hydropower currently account for 40% of China’s total electricity generation, up from 26% ten years ago.

Another major advantage for China lies in policy predictability.

Wang Xinjie told Daily Economic News reporter that, at the policy level, in sharp contrast to the uncertainty of U.S. monetary policy, China does not face inflation issues; monetary policy remains moderately accommodative and still has sufficient room. Therefore, even if oil prices remain high in the later period, there is more room within domestic monetary policy to offset the impact.

Tang Zhijie also expressed a similar view to Daily Economic News reporter: global assets are being re-priced for inflation and policy uncertainty, while Chinese assets are re-priced for profitability risk within a macro framework that is more predictable and supported by policy. Chinese assets are becoming a relatively stable ballast and taking on a low-volatility allocation role. When traditional hedging tools fail, Chinese assets provide diversification value.

Looking ahead, Wang Xinjie concluded: “We believe this trend will continue over the long term, but the underlying logic is not entirely about seeking safety; it is global capital rebalancing and the sustained inflow of funds driven by seeking diversified allocations.”

Disclaimer: The contents and data in this article are for reference only and do not constitute investment advice. Please verify before use. Any action taken is at your own risk.

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