China plans billion-dollar injection for banks and innovation

This year, China plans to inject approximately $44 billion into state-owned banks to strengthen their stability and support the financing of technology companies. The government unveiled the measure in its annual cabinet report at a meeting of the National People’s Congress.

Beijing intends to replenish the capital of financial institutions while gradually addressing the problem of non-performing loans in the banking sector. Analysts predict that large state-owned banks could also receive a capital injection.

The recapitalisation comes at a time when the world’s second-largest economy is facing difficulties in the real estate market, weak consumer confidence and deflationary pressures. At the same time, banks are seeing an increase in bad loans linked to troubled developers and indebted local governments.

The government also plans to regulate competition among financial institutions and support the consolidation of smaller local financial companies. It will set up a fund worth several billion dollars to support domestic demand through interest subsidies, financial guarantees, and risk compensation.

Beijing aims to increase funding for technology companies, develop venture capital and simplify the entry of technology companies onto the stock market through a so-called ‘green channel’. This is intended to speed up the process of listing or mergers and acquisitions.

(reuters, max)