China to pump $54bn into state banks and insurers to boost economy

ByPeter Hoskins Business reporter.

Key points

• The cash injection, which is being led by China's finance ministry, will total 360 billion yuan ($53.6bn; £39.7bn), state news agency Xinhua remarked on Sunday.
• President Xi Jinping has long seen financial stability as key to China's national security.
• The outlet remarked the move "will help further enhance their sound operating capabilities, risk resistance capabilities, and ability to serve the real economy".
• China is pumping tens of billions of dollars into eight state-owned banks and insurance firms to assist shore up the country's financial system and boost its slowing economy.

Notably, the cash injection, which is being led by China's finance ministry, will total 360 billion yuan ($53.6bn; £39.7bn), state news agency Xinhua remarked on Sunday.

Notably, the outlet remarked the move "will help further enhance their sound operating capabilities, risk resistance capabilities, and ability to serve the real economy".

It marks the latest move in Beijing's attempts to reinvigorate the world's second largest economy as it faces problems including trade tensions with the West, the impact of the Iran war and an aging population.

Meanwhile, the package will boost the finances of three major lenders and five insurers including the Industrial and Commercial Bank of China, the Agricultural Bank of China and China Export & Credit Insurance Corporation.

State news outlet Global Times remarked this "will give banks and financial institutions more resources to channel into credit for the real economy, while strengthening their ability to withstand external shocks at a time of global financial uncertainty".

This weekend's announcements come as Beijing is aiming to reshape the economy in the face of a number of challenges such as a shrinking workforce, a years-long property market slump and ongoing trade and technology rivalry with the US.

China's economic expansion slowed sharply between the start of April and end of June as fragile domestic demand and the Iran war's impact on oil rates overshadowed the country's robust exports.

Official gross domestic product (GDP) figures published in July demonstrated China's economy grew in the second quarter by 4.3%, below Beijing's annual target, and after a 5% rise in the first quarter.

In March, Beijing cut the expansion target to a range of 4.5%-5%, its lowest economic expansion goal since 1991, a move some analysts say has given Beijing space to acknowledge pre-existing economic weakness.

For now, china to pump $54bn into state banks and insurers to boost economy remains the part of the story worth watching, and further updates are likely as more details are confirmed.