Chinese assets become conflict safe haven after bolstering resilience
19 November 2025, China, Shanghai: Boats sail past downtown Shanghai on the Huangpu River. The tallest building on the skyline is the Shanghai Tower (rear).
Bernd von Jutrczenka | Picture Alliance | Getty Images
The outbreak of the Iran war sparked a sharp sell-off across most regions and asset classes in March, as investors weighed the impact the conflict would have on inflation and economic output. China proved to be an exception.
Despite its status as one of the world’s major oil importers, China averted the worst of the energy shock caused by the effective closure of the Strait of Hormuz thanks to multi-year efforts to diversify its energy mix and build up reserves.
Its stockpile of over 1.2 billion barrels of oil and diverse mix of energy resources, such as coal, renewables and LNG, made it less vulnerable to upheaval in the Persian Gulf, through which 9% of global oil supply passes.
“Much of the low correlation observed from its capital markets in the last few weeks surely comes from the fact that, as the world’s largest oil importer, it has been thinking strategically about a war for some time,” Julian Howard, chief multi-asset investment strategist at Gam, told CNBC over email.
China’s relative insulation from the conflict could have its roots in the first trade war between the U.S. and China in 2018 during U.S. President Donald Trump’s first term in office, according to Peter Boockvar, chief investment officer at One Point BFG Wealth Partners.
“Back then, Trump punched China in the face, and what’s happened since then is China started going to the gym, and they started to become more resilient and independent,” he told CNBC.
“Our attempt to limit their access to our technology just encouraged them to develop it themselves.”
Different characteristics
Chinese government bonds emerged as an unlikely bastion of stability during a period where other traditional havens, such as gold and U.S. Treasurys, stumbled.
Map of the Middle East and Iran on a globe under a magnifying glass in Shanghai, China on March 29, 2026.
Cfoto | Future Publishing | Getty Images
The 10-year Chinese government bond yield has stayed broadly stable at 1.81% since the conflict began, while U.S. Treasury yields moved almost 50 basis points higher to 4.297%.
China is also one of the few major powers that hasn’t experienced high inflation since 2022, potentially adding to the allure of Chinese bonds over the past month.
“Importantly, the main problem of this crisis was the inability of countries to react effectively, given very stretched fiscal deficits and debt levels and inflation at uncomfortable levels,” Gustavo Medeiros, head of research at emerging markets asset manager Ashmore, told CNBC over email.
“China has been struggling with deflation, so its bond market was less exposed than other major markets. Lower yields mean there was a smaller tightening of financial conditions in China than other countries.”
Chinese assets may have also benefited from their underlying…
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