Chinese leaders are reportedly considering injecting up to 1 trillion yuan ($142.39 billion) into the country’s large state-run banks in the first such move to support the flagging economy since the global financial crisis.
The measure — aimed at giving the banks more room to lend to businesses — will be implemented mainly through the issuance of “new special sovereign bonds,” Bloomberg reported, citing unnamed sources.
The report said the details have not yet been finalised.
Beijing has this week announced some of the strongest measures in years to boost activity in the world’s second-largest economy, which has yet to achieve a full recovery from the pandemic.
Among the woes facing policymakers are a prolonged debt crisis in the property sector, sluggish domestic consumption, and high youth unemployment.
China has not made major capital injections of this kind into the country’s top banks since the 2008 financial crisis.
The slew of moves announced this week, which include key rate cuts and policies intended to encourage home purchases, have been welcomed by investors as stocks in Shanghai and Hong Kong rally this week.
But analysts warn that more fiscal stimulus is needed to get the economy back up to full speed, as leaders continue to seek ways to achieve this year’s official growth target of five per cent year-on-year.
Recent economic data has been disappointing, with second-quarter growth coming in lower than expectations at 4.7 per cent.
Youth unemployment climbed in August to 18.8 per cent — its highest level this year — according to official figures released last week.
Follow us on
