Citigroup Inc recommends investors sell China's 10-year government bonds and buy similar-maturity notes issued by China Development Bank as the improving economy spurs demand for assets offering better returns.

The yield on government debt is close to the upper end of a recent range between 3.5 percent and 3.55 percent and may climb as five-year interest-rate swaps break through a 3.5 percent resistance level, He Weisheng, a Shanghai-based analyst at Citigroup, wrote in a report on Tuesday.