China plans to issue approximately $44 billion (300 billion yuan) in sovereign bonds to recapitalize the country's largest banks, Bloomberg reported, citing data from the Ministry of Finance of the People's Republic of China.

The funds are intended to support financial institutions amid a slowing economy and high market volatility. The Industrial and Commercial Bank of China and Agricultural Bank of China may be included in the 2026 recapitalization program. Bank of China and Bank of Communications already received government support a year earlier.

It is noted that China's largest banks are currently not experiencing serious capital adequacy issues. However, authorities are requiring them to actively lend to the economy at low rates, so additional capital should offset declining profitability and potential risks.

The funds received could also be used to cover potential problem debts in the banking system. This support will allow financial institutions to maintain stability amid a gradual decline in interest rates.

In addition to the bond issue, the government plans to create a special fund of 100 billion yuan to stimulate domestic demand. The program provides for interest rate subsidies and loan guarantees as part of the economic policy pursued by the country's leadership headed by Xi Jinping.