China Injects Record $204B To Boost Financial System For 13th Consecutive Month

China’s central bank, the People’s Bank of China, has once again injected money into the country’s financial system. This marks a continuous streak of 13 months, with the latest addition being the largest since 2018.

What Happened: The People’s Bank of China provided an injection of 1.45 trillion yuan ($204 billion) through its medium-term lending facility on Friday, Bloomberg reported. The new injection, which is 800 billion yuan ($120 billion) more than the amount due in December, exceeded the median estimate of 325 billion yuan ($45 billion) expected by analysts surveyed by Bloomberg. The one-year loan rate remains at 2.5%.

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This ongoing financial support highlights the arduous task Beijing faces to sell an additional 1 trillion yuan ($140 billion) in Q4 of the year to finance its stimulus. Economists will be keenly observing the industrial production and retail sales figures, due on Friday, to gauge the pace of economic recovery and determine if additional government support will be necessary.

Why It Matters: The recent actions of China’s central bank are significant in light of the country’s economic scenario. Earlier in December, Kyle Bass, CIO of Hayman Capital Management, voiced concerns about a full banking system collapse in China. He pointed out the mounting debt in the Chinese economy, reaching over $12 trillion or more than 75% of the country’s total economic output.

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