Last week, the People's Bank of China injected cash totaling 810 billion Chinese yuan ($122.4 billion) in five straight days of daily liquidity management operations. Those actions, which represented the largest weekly net increase since January, were in part a Beijing response to its 10-year sovereign bond yields spiking to multiyear highs, experts said.
"Surging Chinese government bond yields hit the nerve of policymakers, so in order to further prevent a greater surge, they injected liquidity into the system to improve market sentiment," said Ken Cheung, a foreign exchange strategist at Mizuho Bank who focuses on Chinese currencies and monetary policies.
Nomura analysts said last week in a note that the bond rout was due to fears of regulatory tightening from Beijing. Bond yields, which move inversely to prices, briefly hit 4 percent in China for the first time in three years.
A rise in the benchmark government bond yield threatens to drive up overall borrowing costs — and potentially worsen the country's debt situation.
On Monday and Tuesday of this week, the PBOC injected a net 30 billion yuan ($4.5 billion), but it didn't expand that money supply on Wednesday. Analysts said that pause may have been due to market sentiment seemingly stabilizing, but it may be short-lived.
As Chinese 10-year yields are still near the psychologically important 4 percent level, Cheung told CNBC he expects more injections ahead if necessary, as Beijing needs to "maintain liquidity to please the market."