China is preparing to inject 300 billion yuan (about $45 billion) into its banking sector and major state-owned insurance companies, as part of the largest capital increase plan in nearly 20 years, to strengthen the financial system and boost lending capacity amid a slowing economy. The Ministry of Finance will issue special bonds to raise funds for capital injections into eight major financial institutions, including ICBC, Agricultural Bank of China, and People's Insurance Company (Group) of China. This latest measure brings the total amount injected by the Chinese government into the financial sector since the beginning of 2025 to 800 billion yuan, as the government accelerates its economic recovery measures following Premier Li Qiang's call for officials to make every effort to achieve this year's economic growth target. Regarding the details of the capital increases, Agricultural Bank of China plans to raise up to 160 billion yuan, while ICBC aims to raise 100 billion yuan through targeted share placements. Both banks will use the funds to boost their Tier 1 capital. The Ministry of Finance will subscribe to 130 billion yuan of Agricultural Bank of China shares and 70 billion yuan of ICBC shares, with China National Tobacco Corp. also being a major investor in both deals. Analysts at Huayuan Securities view this capital increase as a policy that has been planned for two years, not an emergency measure, to ensure banks have adequate capital and are ready to support the economy. In addition to the banking sector, the government is also injecting capital into major insurance companies. The Ministry of Finance will subscribe to 15 billion yuan of new shares in People's Insurance Company, and allocate 30 billion yuan to Export–Import Bank of China, 35 billion yuan to China Life Insurance, 7 billion yuan to China Taiping Insurance Group, 3 billion yuan to China Reinsurance (Group), and 10 billion yuan to China Export & Credit Insurance Corp. This move comes as Chinese banks face pressure from narrowing net interest margins, which have hit record lows. As of June, Chinese banks had an average capital adequacy ratio of 15.26% and an average Core Tier 1 ratio of 10.72%. The latest capital increase plan is a continuation of policies promoted since 2024 and aligns with the second phase of the Total Loss-Absorbing Capacity (TLAC) framework, which requires systemically important banks to hold sufficient capital in times of crisis.
Agricultural Bank of China Ltd Class AAgricultural Bank of China plans to raise up to 160 billion yuan via targeted share placements, with the Ministry of Finance subscribing 130 billion yuan, boosting its Tier 1 capital.
People's Insurance of China LtdThe Ministry of Finance will subscribe to 15 billion yuan of new shares in People's Insurance Company as part of the state capital injection.
Industrial and Commercial Bank of China LtdICBC aims to raise 100 billion yuan through targeted share placements, with the Ministry of Finance subscribing 70 billion yuan to boost Tier 1 capital.
China Life Insurance Co Ltd AThe Ministry of Finance will allocate 30 billion yuan to Export-Import Bank of China as part of the capital injection plan.
