BEIJING, Sept. 7 (Xinhua) -- China's Ministry of Finance said on Monday that it will soon issue 300 billion yuan (about 44.25 billion U.S. dollars) in special treasury bonds to support eight state-owned financial enterprises directly administered by the central government in replenishing their core Tier 1 capital.
This move is expected to further strengthen these institutions' operational capacity, resilience to risks and ability to serve the real economy, providing stronger support for the country's steady and sound economic growth, according to a circular issued by the ministry.
The eight institutions include two major state-owned commercial banks, namely Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (ABC); two policy financial institutions, namely the Export-Import Bank of China and China Export & Credit Insurance Corporation; and four state-owned commercial insurers, which are the People's Insurance Company (Group) of China, China Life Insurance (Group) Company, China Taiping Insurance Group and China Reinsurance (Group) Corporation.
For listed enterprises, the capital replenishment is also expected to help create greater value for investors and deliver stable long-term returns, the circular noted.
The eight institutions are currently operating steadily, with stable asset quality and major regulatory indicators remaining within safe and healthy ranges, it said, adding that the capital replenishment endeavor will be carried out prudently in accordance with market-oriented and law-based principles.
Core Tier 1 capital is the highest-quality form of capital used to absorb losses and serves as a key buffer against financial risks. For banks, a stronger core Tier 1 capital position generally provides more room to expand lending while maintaining regulatory capital ratios.
Monday's announcement came after the eight firms on Sunday unveiled specific plans to strengthen their core Tier 1 capital, with a combined 360 billion yuan to be raised or received. Of the total, around 300 billion yuan will be funded via the aforementioned special treasury bond issuance, while the remaining 60 billion yuan will come from share subscriptions by China National Tobacco Corporation and its related subsidiaries.
The move marks another large-scale capital replenishment by the Ministry of Finance through special treasury bonds, following a similar 500-billion-yuan capital injection into four major state-owned commercial banks in 2025. With ICBC and ABC included in the latest round, all six of China's major state-owned commercial banks have now received capital support under these two rounds of fiscal injections.
Dong Ximiao, chief economist at Merchants Union Consumer Finance Company Limited, described the capital injection as a forward-looking strategic move. He noted that banks' ability to accumulate capital internally has weakened amid declining interest rates and narrowing net interest margins, while global systemically important banks such as ICBC face higher additional capital requirements when they move into higher regulatory buckets.
Lou Feipeng, a researcher at China Postal Savings Bank, said the capital replenishment will provide strong support for ICBC and ABC to expand lending in line with economic development needs and broaden their capacity to serve the real economy.
Experts also highlighted that the latest round of capital replenishment has expanded beyond major state-owned banks to include insurers directly administered by the central government, which serve as economic "shock absorbers" and social "stabilizers," and policy financial institutions, tasked with supporting the country's economic and social development priorities.
Dong pointed out that capital consumption in the insurance sector has increased markedly as insurers play a greater role in supporting national priorities such as elderly care and healthcare.
He said the immediate purpose of these capital injections into the financial institutions is to strengthen capital buffers and enhance risk resilience, while the more fundamental aim is to boost their capacity to extend credit, support major projects and facilitate industrial upgrading, thereby enabling them to better serve the real economy.
Senior market analysts expect capital replenishment of the banks and policy financial institutions to have a multiplier effect, potentially unlocking trillions of yuan in additional lending capacity and channeling more financing toward strategic areas like technology, green development and infrastructure. ■
