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China to inject $54bn into banks and insurers to support stock lending
The package includes 35 billion yuan for China Life Insurance and 7 billion yuan for China Taiping, alongside 290 billion yuan in capital injections for three state lenders.
China is preparing a $54 billion, or £40 billion, stimulus for its financial sector as policymakers seek to shore up banks and insurers amid concerns about sluggish economic growth, Guardian Economics reports.
The plan is intended to replenish cash and improve financial institutions’ ability to invest in the stock market and lend to businesses. State entities will provide billions of yuan in capital to a range of financial firms, including major insurers and lenders.
Guardian Economics reports that China Life Insurance is expected to receive 35 billion yuan, while China Taiping Insurance Group plans to receive 7 billion yuan. The People’s Insurance Company of China also said it plans to raise up to 15 billion yuan through a private placement of A-shares, with proceeds used to replenish capital.
The outlet also notes that the capital injections are meant to help state insurers directed by Beijing to support the stock market with medium- and long-term funds. Guardian Economics adds that the insurance sector has faced pressure from persistently low interest rates, with some smaller and mid-sized insurers reporting deteriorating solvency ratios.