China is set to inject approximately $54 billion (£40 billion) into its financial sector in an effort to bolster banks and insurance companies amid slowing economic growth. This move comes as Beijing seeks to strengthen the financial system’s capacity to support the economy through investments in the stock market and lending to businesses. The capital will be provided by state institutions, including the Ministry of Finance and China National Tobacco Corp, which operates the country’s state-run tobacco monopoly. This injection follows signs that China, the world’s second-largest economy, is struggling to move away from weak economic performance. Among the recipients, China Life Insurance, the country’s largest life insurer, will receive 35 billion yuan, while China Taiping Insurance Group will get 7 billion yuan. The People's Insurance Company of China plans to raise up to 15 billion yuan through a private placement of A-shares—stocks that are traded on China’s domestic stock exchanges—to the Ministry of Finance. These funds will be used to strengthen the company’s capital base. The initiative aims to support state insurers in providing long-term funds to the stock market and assist regulators in managing smaller, riskier insurance firms. The insurance sector has faced challenges due to persistently low interest rates, which have led to declining profitability. Many smaller and mid-sized insurers have reported worsening solvency ratios, which measure a company’s financial health. China Life Insurance emphasized that the capital injection is a key step in strengthening the financial sector’s ability to support the real economy and promote high-quality development in the insurance industry. The company added that it will be better equipped to withstand financial risks. In addition to insurance companies, three major state-owned banks have also announced plans to receive a combined 290 billion yuan in capital injections. The Agricultural Bank of China and the Industrial and Commercial Bank of China, two of the country’s largest banks, will raise up to 160 billion yuan and 100 billion yuan respectively through private A-share placements to the Ministry of Finance and China National Tobacco Corp. The funds will be used to replenish their cash reserves, ensuring they can continue to support economic growth through lending, even as demand for loans remains weak. This initiative was first announced during an annual parliamentary meeting in March, extending a similar financing tool that helped strengthen major banks last year.