China is preparing a roughly $54 billion (£40 billion) capital injection into major banks and insurers as Beijing tries to strengthen the financial sector and support a slowing economy. 

The plan includes funding from China’s Ministry of Finance and state-owned enterprises, with major insurers such as China Life and China Taiping among those receiving new capital.

Three major state-owned banks, including Agricultural Bank of China and Industrial and Commercial Bank of China, are also set to receive a combined 290 billion yuan to replenish their capital and maintain lending. 

The move comes as China faces weak domestic demand, declining demand for loans and pressure on banks and insurers from low interest rates and slowing economic growth, The Guardian has reported.

Officials hope the additional capital will make financial institutions more resilient while encouraging lending and investment, although analysts warn that simply strengthening banks may have a limited effect if businesses and consumers remain reluctant to borrow and spend.