China's government pumps $54B into banks, insurers amid slow growth

Sept. 7 (UPI) -- China said Monday it will pump $54 billion in state support into government-owned financial institutions and insurance companies as it seeks to deal with mounting financial stress caused by a slowing economy. The Ministry of Finance announced it will invest 300 billion yuan in special treasury bonds to recapitalize five insurers and a trio of state lenders, including the Industrial and Commercial Bank of China, Agricultural Bank of China, Export-Import Bank of China and the China Export & Credit Insurance Corp. The eight institutions "are operating steadily, with stable asset quality and key regulatory indicators functioning smoothly within a safe and healthy range," ministry officials said in a statement. "Supporting these central financial enterprises in replenishing their [core] capital through the issuance of special treasury bonds will help further consolidate and enhance their sound operational capabilities, risk resistance capabilities, and ability to serve the real economy, promoting high-quality development and providing stronger support for the stable and healthy development of the national economy," the statement read. Monday's moves are second capital injection into China's banking system in six-month span but are the first involving insurance companies. They are an indicator of the high priority given to financial stability under President Xi Jinping. The recaps for the vital institutions are also coming as Beijing's official gross domestic product figures show a slowing trend as it deals with challenges including U.S. President Donald Trump's trade wars and efforts by American competitors to match its emerging technology, especially in artificial intelligence. China's economic growth was 4.3% in the second quarter, below its stated annual target, as the Iran war's price-raising impact on oil prices hit home. The country is also facing debt pressures, which are unfolding as it struggles with a prolonged property slump, weak domestic demand, youth unemployment and tight cash flow among smaller companies and private businesses. "The recapitalization of major state-owned financial institutions has been a policy arrangement for the past two years, rather than an emergency measure," Huayuan Securities Co. analyst Liao Zhiming told Bloomberg. "The key is to make capital arrangements in advance so that the banks have sufficient capacity to meet regulatory requirements and support the real economy."