In every global crisis of our generation — the 2001 dot-com crash, the 2008 financial crisis, the 2020 COVID crisis — global investors sought safety in US Treasuries, placing capital in the 10-year US government bond. The 2026 war in Iran has broken that pattern. For the first time in a global crisis, China's government bonds are the only safe haven, holding their value while US Treasuries, other government bonds, and even gold have sold off. Meanwhile, equity markets in China have also lost less value than their counterparts in the US, Europe and Japan.
This is happening despite investors' well-documented reservations about Chinese assets — political risk, capital controls, and the difficulty of converting renminbi into dollars, euros, or yen. That is because, as we have written in the past year, China's safe haven status is part of a larger shift: trust in US stability is declining, while China is no longer seen as uninvestable, leads in technological innovation, sets global standards, has soft power and is better prepared for an era of prolonged global conflict.
