Reuters quoted financial news magazine Caixin as reporting that as part of its latest move, the central bank will inject $32bn and $30bn into China Development Bank (CDB) and Export-Import Bank of China, respectively.
The capital injection is expected to provide long-term foreign currency for the state-owned banks to support Beijing’s latest initiative "One belt, One road."
The initiative, which is also known as the New Silk Road, is expected to improve links between Asia, Europe and Africa and aims for better connectivity to foreign markets.
China will inject foreign exchange reserves by transferring entrusted loans into stakes, the magazine said citing various sources.
Another state-owned policy bank Agricultural Development Bank of China (ADBC), which supports the farming sector, will also receive financial boost from the central bank.
Last week, China’s cabinet gave its consent for the central bank’s reform plans for CDB, Exim Bank and ADBC so as to advance finance projects during the prevailing economic slowdown. Due to signs of capital outflows, the foreign currency reserves of China in the first quarter are said to have declined by $110bn to $3.73tn.
In the past China had recapitalised big state lenders to help them restructure as well as list their shares by using a portion of its foreign currency reserves, the news agency said.
Image: People’s Bank of China headquarters in Beijing. Photo: courtesy of user:Yongxinge
