PBOC boosts capital of China's policy banks

Hong Kong

AS China's leadership pulled together very public efforts to address local-government debt strains and a stock selloff in recent months, officials took less conspicuous steps to strengthen the state's lending capacity.

With the fixes for the equity market and local authorities relying on credit from commercial banks, a recapitalisation of China's so-called policy banks will help sustain loan growth. The central bank has put US$48 billion into China Development Bank Corp (CDB), people familiar with the matter said this month. Export-Import Bank of China got US$45 billion, Caixin magazine reported.

The People's Bank of China's (PBOC) stakes in the two lenders make it easier for the central bank to conduct targeted easing through institutions whose loans reflect the social and foreign-policy objectives of the Communist leadership. With exports faltering this year, th…