China depends on policy banks for $120bn

Beijing has ordered state-owned policy banks to give 800 billion yuan ($120 billion) in finance for infrastructure projects in order to help rescue an economy in trouble.

The stimulus, which was presented at a State Council meeting chaired by Premier Li Keqiang, could help finance a large portion of infrastructure spending this year and provide some relief to local governments coping with falling income.

President Xi Jinping has called for an all-out effort to improve infrastructure this year, reverting to a tried-and-true strategy of boosting GDP through government spending. However, following a drop in land sales and extensive Covid outbreaks devastated government revenue, funding the extra spending has become difficult.

China Development Bank, Agricultural Development Bank of China, and Export-Import Bank of China are among China’s policy lenders. They are regarded as important economic stabilisers and are frequently called upon to offer financial support for large projects, such as infrastructure.