China's capital injection plan to enhance top banks' risk resilience, lending capacity: experts

China's plan to inject capital into state-owned banks aims to enhance their risk resilience and lending capacity to better serve the development of the real economy, experts said.

Minister of Finance Lan Fo'an told a press conference on Saturday that China will issue special treasury bonds to support large state-owned commercial banks in replenishing the core tier-1 capital.

Tier-1 capital refers to the core capital held in a bank's reserves, including common stock and disclosed reserves.

"Replenishing capital can further enhance the lending capacity of these commercial banks, as the banks need to provide loans and supply more funds to the market. At the same time, the banks also need to consider the adequacy of capital due to the requirements for creditworthiness. Therefore, this capital injection can further improve the lending capabilities of state-owned commercial banks, allowing them to better serve the real economy," said Yang Zhiyong, director of the Center for Public Finance and Taxation Research at the Chinese Academy of Social Sciences (CASS).

Currently, the operations of China's major state-owned commercial banks are generally stable, with key indicators remaining within a healthy range consistent with international best practices.

The average core tier-1 capital adequacy ratio of those major banks stood at 12.3 percent as of the end of June 2024.

Zhu Qing, a professor of the School of Finance at Renmin University of China, believes that the replenishment of core tier-1 capital is also in response to the heightened international requirements.

"In terms of capital management in commercial banks, the capital adequacy ratio has increased due to the higher global requirements for tier-1 capital. To meet these international standards, the government must utilize methods such as issuing debt to raise funds and strengthen the capital base of state-owned commercial banks," said Zhu.

This work has already begun with the Ministry of Finance, in collaboration with relevant financial regulatory authorities, establishing an interdepartmental working mechanism. A cross-department work group is awaiting specific proposals from the banks for capital replenishment, and all related work is progressing in an orderly manner.

China's capital injection plan to enhance top banks' risk resilience, lending capacity: experts

China's capital injection plan to enhance top banks' risk resilience, lending capacity: experts

China's capital injection plan to enhance top banks' risk resilience, lending capacity: experts

While its biomedical innovation has demonstrated vigorous momentum in recent years, China is providing better and more affordable therapeutic solutions to meet global needs, Eric Tse, CEO of Sino Biopharm, said in a recent interview with China Global Television Network (CGTN) on the sidelines of the ongoing annual meeting of the World Economic Forum (WEF) in Davos, Switzerland.

He emphasized that China is emerging as a key player in global biopharmaceutical innovation.

"I think China has definitely taken a much bigger part of the role in terms of global innovation development. We can see that China's data really rise from 5 percent of having innovative [products] into past 50 percent. Last year, I think the deals right now are rising from the top 10 out-licensing deals raised from in the past, maybe zero number right now, it's like half of them around Chinese companies. I think this really came out from how our talent dividends really drove our innovation going forward. And then, I think in the future, in the coming years, there will be more and more China-developed assets -- or not only fast-follower drugs but innovative drugs and products, that will be going forward. We're anticipating a very good 2026 or even 2027," said Eric Tse.

He further underscored that China's world-class biopharma clusters are driving medical innovations that benefit patients across the globe.

"China assets can really benefit the world. It's not only in the drug or the asset itself, but also on the infrastructure and ecosystem that it's building. Right now, it's like Shanghai, Beijing, Guangzhou, and let's say Jiangsu has a lot of cluster in terms of biotech pharmaceuticals. And, it is a, I think, given more and more attention in comparison in a decade ago -- a decade ago again, maybe you only have 5 percent of innovation globally. Right now, it's like that number went up by, let's say, at least four or five times. So, I think this is how we contribute to global med-needs and therapies, and having patients to access faster and better and more affordable therapies," he said.

Under the theme "A Spirit of Dialogue," the five-day 2026 WEF annual meeting is running in Davos through Friday. About 3,000 leaders and experts from around the world are gathering to discuss five pressing global challenges, including enhancing cooperation, unlocking new sources of growth and deploying innovation at scale and responsibly.

China's biotech clusters fuel better, affordable therapies for worldwide needs: insider