China will inject £54 billion into its financial sector as Beijing attempts to shore up banks and insurers in the face of faltering economic growth.
The Guardian is reporting that a host of financial institutions said they were due to receive billions of yuan in capital from state institutions including the ministry of finance and the company that runs the country’s tobacco monopoly.
The stimulus is designed to help China bolster the ability of its financial sector to invest in the stock market and lend to businesses, amid signs that the world’s second largest economy is struggling to escape weak growth.
The country’s largest life insurer, China Life Insurance, will get 35 billion yuan, while the China Taiping Insurance Group said it would receive 7 billion yuan.
The People’s Insurance Company of China said it planned to raise up to 15 billion yuan through a private placement of A-shares – stock that specifically allows investors to trade in China-based companies, with the proceeds used to replenish its capital.
The initiative could help bolster state insurers that have been directed by Beijing to support the stock market with medium and long term funds, while positioning them to help regulators manage smaller, higher-risk insurance companies.
