China to pump $54bn into state banks and insurers to boost economy

China is injecting $53.6 billion into eight state-owned banks and insurance companies to bolster its struggling economy and strengthen its financial system. The finance ministry led this $360 billion yuan ($53.6 billion) cash injection, which will enhance the banks' and insurers' robustness, risk resistance, and capacity to support the real economy.

This move reflects Beijing's efforts to revive China's second-largest economy amid trade tensions with the West, the Iran war, and an aging population. The funds will bolster three major lenders and five insurers, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, and China Export & Credit Insurance Corporation.

The package aims to provide more resources for credit distribution to the real economy while boosting their ability to withstand external shocks during global financial uncertainty. President Xi Jinping has emphasized financial stability as pivotal to China's national security. The announcements coincide with Beijing's efforts to reshape the economy, addressing challenges such as a shrinking workforce, a prolonged property market slump, and ongoing tech and trade rivalry with the US.

Economic growth in China slowed significantly between April and June, with weak domestic demand and the Iran war's impact on oil prices overshadowing strong exports. Official GDP figures released in July indicated a 4.3% growth in the second quarter, below Beijing's annual target and a 5% rise from the previous quarter. In March, Beijing lowered its growth target to a range of 4.5%-5%, the lowest expansion goal since 1991, acknowledging pre-existing economic weakness.