China is injecting 300 billion yuan ($45 billion) into its largest banks and insurers, part of the nation's biggest recapitalization in almost two decades, to shore up its financial system and sustain lending as economic growth slows, according to Bloomberg. The Ministry of Finance will issue special bonds to recapitalize eight institutions, including Industrial & Commercial Bank of China, Agricultural Bank of China and People's Insurance Company (Group) of China, according to official announcements on Sunday. The package adds to a combined 500 billion yuan of government injections since early 2025 as Beijing steps up efforts to rejuvenate the world's second-largest economy, with Premier Li Qiang recently urging officials to "strive to achieve" annual growth targets.

While China's financial institutions hold adequate capital buffers, the plan aims to provide more firepower for lending to businesses and households, with financial stability remaining a cornerstone of President Xi Jinping's agenda as China navigates a protracted trade and technology rivalry with the US. Huayuan Securities analyst Liao Zhiming said the recapitalization of major state-owned institutions has been a policy arrangement over the past two years rather than an emergency measure, with the key being to make capital arrangements in advance. ICBC shares fell 0.78% and Agbank slid 0.69% in early Hong Kong trading, while People's Insurance was little changed.

Agbank is seeking up to 160 billion yuan and ICBC 100 billion yuan in separate private placements to replenish core tier-1 capital, according to Shanghai exchange filings, with the Ministry of Finance subscribing 130 billion yuan and 70 billion yuan respectively and China National Tobacco also a big subscriber. The ministry will fully subscribe to People's Insurance's 15 billion yuan placement and contribute to the Export-Import Bank of China, China Life, China Taiping, China Reinsurance and China Export & Credit Insurance. The banking sector's average net interest margin has dropped to historic lows, with an average capital adequacy ratio of 15.26% and core tier-1 ratio of 10.72% as of June.

The move caps a policy push begun in 2024, with this year's government work report proposing 300 billion yuan of special bonds for the purpose. Last year, Bank of China and Postal Savings Bank were among four lenders that received a combined $69 billion injection. Regulators are gradually replenishing capital at all six of China's largest state-owned banks to help them prepare for the second phase of global Total Loss-Absorbing Capacity requirements. Rather than relying solely on direct spending or monetary easing, Beijing is using its control over the financial system to strengthen the balance sheets of institutions that channel capital to the economy, giving lenders more room to support strategic industries, infrastructure and private companies while containing risks from the property downturn and local-government debt.