From WeChat public account: Fengchang Insight, Author: Fang Leng Tu De La
On September 6, 8 central financial enterprises simultaneously announced capital increase plans. ICBC plans to raise 100 billion yuan, ABC 160 billion; the Ministry of Finance will also inject 30 billion and 10 billion into the Export-Import Bank of China and China Export & Credit Insurance Corporation respectively. China Life Group, PICC, China Taiping and China Re received fiscal injections of 35 billion, 15 billion, 7 billion and 3 billion respectively. Total capital increase for the 8 institutions reaches 360 billion yuan, of which 300 billion comes from the Ministry of Finance and 60 billion from China Tobacco system.
This list is not exactly the same as the policy arrangement announced six months ago.
This year's government work report proposed issuing 300 billion yuan of special treasury bonds with a clear purpose: to support large state-owned commercial banks in replenishing capital. In reality, the Ministry of Finance gave only 200 billion to ICBC and ABC, while the remaining 100 billion went to policy banks, export credit insurance and insurance companies.
Over the past few years, after the real estate contraction, “where will the money flow” has been widely discussed. Advanced manufacturing, technological innovation, new infrastructure and capital markets are all receiving more financial resources. But after money finds new destinations, the financial system must answer a more fundamental question: who bears the risk of these new assets?
During the rapid expansion of real estate, a large amount of credit could be concentrated within the commercial banking system. Now the technology enterprises, long-term projects and overseas investment that need more financing have different asset characteristics, requiring different financial instruments and institutions better suited to bear risks. Today's 300 billion yuan provides a window to observe this shift.
▌Real estate once allowed banks to complete most credit expansion
The importance of real estate to China's economy in the past came not only from sales, investment and upstream/downstream industries. It is also a very suitable asset for banks. Banks making loans need to judge the borrower's cash flow and debt servicing ability, and also consider how much principal can be recovered if the loan goes bad. Housing and land provide relatively mature collateral: residential properties have location, area and market transaction prices for valuation and mortgage, as well as a mature secondary market; developers can also obtain financing around land, construction in progress and project cash flow.
This feature makes real estate easily absorbed by bank balance sheets. At the end of 2020, China's real estate loan balance reached 49.58 trillion yuan, accounting for 28.7% of total RMB loans, of which 34.44 trillion yuan were individual housing loans; new real estate loans in that year alone reached 5.17 trillion yuan, accounting for 26.1% of the annual increase in various loans.
Real estate was able to generate such a large scale of credit also because it connected several sectors simultaneously. Households buying homes formed long-term mortgages; developers taking land and building formed development loans, bonds and other financing; land transfer revenue entered local finance and then supported urban construction and infrastructure investment. Households, developers, local governments and banks were connected through housing and land into the same credit cycle. When housing prices rose for a long time, collateral values increased simultaneously, further reducing banks' perceived risk of such assets.
But changes over the past few years have been obvious. In the first 7 months of 2026, national real estate development investment fell 19.2% year-on-year, and sales of newly built commercial housing dropped 13.1%; funds available to developers decreased 20.3%, of which domestic loans fell 32.1% and individual mortgage loans fell 23.5%. Real estate will still occupy an important position in China's financial system for a long time, but the credit cycle that relied on households continuously leveraging to buy homes, developers expanding development, and land revenue driving more investment has clearly slowed down.
Banks need to find new assets. The problem is that the new assets being encouraged by policy do not have the same financing conditions as real estate.
▌New assets can no longer be packed into the same financial product
Since the beginning of this year, the direction of financial policy support is not vague. The quota for re-lending for technological innovation and technological transformation continues to increase, risk-sharing instruments for technological innovation and private enterprise bonds have been implemented, and the government work report also arranged 800 billion yuan of new policy-based financial instruments to drive more social capital to participate in investment. Funds are flowing more towards technology, advanced manufacturing, major projects and private investment, but the biggest difference between these assets and real estate is not just the industry change, but the sources of risk and funding needs have both changed.
Technology enterprises: the most important assets are often not collateralizable
A real estate company can provide land and property for banks to value based on market transaction prices. An AI, biopharma or semiconductor company's most important assets may be its R&D team, patents, technical roadmap and product revenue that may materialize years later. These things certainly have value, but they are difficult to value and dispose of in the same way as housing mortgages.
If the technical roadmap succeeds, the enterprise's future value may increase rapidly; once R&D fails, the upfront investment is hard to turn into assets sufficient to repay loans. Banks can increase technology lending, but many innovation risks cannot be fully resolved through debt financing. Equity capital plays a greater role in technology financing precisely because debt first requires principal and interest to be repaid, while equity itself bears a greater probability of business failure.
Long-term projects: funding tenor becomes a constraint
Energy, transportation, new infrastructure and some large industrial projects require huge upfront investment with payback periods that may exceed ten years. Commercial banks can certainly provide long-term loans, but if the financial system accumulates more and more low-liquidity, long-duration assets, relying solely on banks for term transformation is not the only option. Insurance funds with long-term liabilities and policy-oriented financial institutions are more suitable to participate in part of these long-term assets.
Going global: beyond operating risk, there is also country risk
When a company builds a factory domestically, financial institutions mainly assess project returns, business operations and debt servicing ability. Moving the same project overseas also exposes it to local policy changes, overseas buyer default, exchange rates, political risks and even regional conflicts. A company's normal operations cannot eliminate these risks.
So after real estate contraction, China does not lack new investment directions. What really changes is that these assets can no longer be packed into the same financial product. The uncertainty of technological innovation, the tenor risk of long-term projects and the country risk of overseas investment are difficult to price and manage in a similar way to the massive housing mortgages of the past. Banks will still provide a considerable portion of the funds, but it is hard for a single asset class or a single type of financial institution to complete the concentrated credit expansion of the real estate era.
▌The 300B expansion is about assigning different risks to different bearers
ICBC and ABC still received the largest capital supplement. The two banks together plan to raise 260 billion yuan, of which the Ministry of Finance subscribes 200 billion and the China Tobacco system subscribes 60 billion, all proceeds used to replenish core Tier 1 capital. But this time, the fiscal did not allocate all 300 billion to commercial banks; the remaining 100 billion flowed to policy finance, export credit insurance and insurance institutions.
Commercial banks: still the main channel of credit expansion
Manufacturing, small and micro enterprises, infrastructure, technology enterprises and household financing ultimately still have a large amount of funds coming from banks. For every increase in loans and other risk assets, banks must consume capital; replenishing core Tier 1 capital first increases the headroom for future expansion of risk assets. At the end of the second quarter of 2026, the loan balance for technology-based small and medium-sized enterprises reached 4.15 trillion yuan, up 20.1% year-on-year, indicating that banks have not withdrawn from new economy financing, but need to share risks of different natures with other funds.
Policy finance and export credit: splitting long-term and overseas risks
Among them, 40 billion yuan goes to the Export-Import Bank of China and Sinosure, directly related to the background of Chinese companies continuing to go global. As companies shift from simply exporting goods to overseas plant construction, investment and long-term operations, financing tenors lengthen and additional risks beyond ordinary commercial operations emerge. The Export-Import Bank can provide long-term, policy-oriented and large-scale project financing, while Sinosure bears part of the overseas buyer default, commercial credit and country risks.
In 2025, Sinosure’s annual underwriting amount once again exceeded US$1 trillion, and medium- and long-term export credit insurance projects covered 59 countries and regions. They do not simply replace commercial banks; an overseas project can simultaneously involve commercial bank loans, policy financing and export credit insurance. The risks originally borne by a single enterprise or a single financial institution are split among different balance sheets.
Insurance institutions: long-term funds need thicker risk buffers
The other 60 billion yuan enters China Life Group, PICC, China Taiping and China Re. Insurance, especially life insurance, has large amounts of long-term liabilities of ten or even decades, naturally able to hold long-term bonds, infrastructure, equities and some equity assets, but having long-term funds does not mean it can bear unlimited asset price volatility.
In 2025, when the National Financial Regulatory Administration adjusted the regulatory ratio for insurance funds' equity assets, it directly linked the investment cap to comprehensive solvency adequacy ratio, with different intervals corresponding to 10% to 50% equity asset caps. Fiscal capital injection for insurers first improves capital strength and risk-bearing capacity; how much equity, infrastructure or other long-term assets they ultimately increase will also depend on liability costs, asset prices and expected returns.
Looking at today's 8 institutions, the biggest change in the 300 billion capital injection is that the fiscal did not allocate all the newly added risk-bearing capacity to banks.
▌The fiscal is beginning to supplement the risk-bearing capacity of the financial system
This change also needs to be seen in the context of this year's larger policy environment. China is not short of low-cost funds; in 2026, the moderately accommodative monetary policy continues, structural monetary policy tool interest rates continue to fall, and more re-lending support is provided for technological innovation, technological transformation and private enterprises. But low interest rates have not led households and enterprises back to the credit expansion speed of the real estate boom. In the first 7 months of 2026, RMB loans increased by 10.38 trillion yuan, significantly less year-on-year; household loans cumulatively decreased by 827.1 billion yuan.
If a company is unwilling to expand production capacity due to insufficient orders, a slightly lower lending rate may not change its investment decision; if a technology company lacks collateralizable assets, banks having more liquidity does not mean it can obtain the same scale of credit as housing mortgages; when an overseas project has political and country risks, a few dozen basis points drop in lending rate similarly cannot eliminate the possibility of buyer default or project interruption. Continuing to provide cheap money remains important, but it is no longer sufficient to solve all problems.
Some of this year's fiscal policies have begun to add another type of tool. In addition to the 300 billion special treasury bonds to replenish financial institution capital, there is also 800 billion yuan of new policy-based financial instruments and 100 billion yuan of fiscal-financial synergy funds to boost domestic demand. The latter guides financial resources into consumption and private investment through loan subsidies, financing guarantees and risk compensation. Their specific uses differ, but the fiscal funds do not simply stay in “direct government spending” in one way: part becomes financial institution capital, part participates in project capital formation, and part reduces the costs and risks of commercial financial institutions through subsidies, guarantees and risk compensation.
If all 300 billion yuan went into large banks, it would mainly continue the path of “supplement bank capital – expand credit space”. The final list expanding to policy finance, export credit and insurance institutions shows that what needs to be increased is no longer just banks' lending capacity. The fiscal is beginning to supplement the broader risk-bearing capacity of the financial system.
After the real estate credit cycle contracted, macro policy can hardly rely on the old “interest rate cuts – bank lending – households and enterprises leverage up”; the central fiscal is increasingly using capital injections, guarantees and risk compensation to provide room for financial institutions to take on new risks.
▌After real estate, there may be no second real estate
Over the past few years, people have been looking for a new growth engine after real estate. But from the financial system's perspective, there may not be another industry in the future that, like real estate, simultaneously connects households, enterprises, local governments and commercial banks, and concentrates huge credit on one relatively standardized asset.
Technology, long-term projects and going global face completely different risks. What is more likely in the future is that different assets are borne by different financial institutions, with the fiscal providing capital and buffers for some of those balance sheets.
Therefore, the most noteworthy aspect of this 300 billion yuan may not be the number itself, but where the money ultimately flows.
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