China’s central bank is turning once again to its banks to steady a wobbling stock market. Regulators were due to sit down with the country’s largest lenders on Monday to discuss how to make a state-backed loan programme for share buybacks work harder, following a punishing month for Chinese equities.
What is on the table
The People’s Bank of China was reported to be meeting the National Financial Regulatory Administration, the China Securities Regulatory Commission and major banks to discuss improving a relending programme for share buybacks and stake increases. Some securities firms and funds, part of the so-called National Team that supports stock purchases, had also received notices for a Monday morning meeting with the central bank and the securities regulator.
These details come from mainland media reports citing industry sources, and no official outcome had been announced at the time of writing. The reports describe a discussion about the programme rather than a decision to change it.
Why now
The timing follows a bruising October. The CSI 300 index slumped 8.5% last month, its worst monthly performance since the aftermath of the 2015 stock rout, and slid into a bear market. A global selloff in AI-related shares weighed on sentiment, alongside persistent worries about China’s economic growth and the outlook for further fiscal stimulus.
Officials had already signalled concern. At a party committee meeting on October 30, chaired by CSRC Chairman Wu Qing, the securities regulator pledged to stabilise the market and expectations.
How the tool works
The facility at the centre of Monday’s talks is not new. Authorities introduced a 300 billion yuan (about $45 billion) relending facility in October 2024 to encourage commercial banks to lend to listed companies and major shareholders for share repurchases and stake increases. Eligible banks can obtain relatively low-cost funding from the central bank to finance those transactions, which is meant to support share prices and rebuild investor confidence.
Analysts say the approach follows a familiar pattern. In earlier episodes of prolonged equity weakness, coordinated meetings between regulators and banks have tended to precede packages built around buyback financing, relending facilities and state-linked buying. One commentator told the South China Morning Post that such countercyclical measures are particularly useful when markets are oversold and shares look undervalued.
Markets respond
Investors took the reports as a positive signal. The CSI 300 rose 0.8% to 4,016.92 at the close. Local media also reported that two state-backed investment groups on the National Team, China Reform Holdings and China Chengtong Holdings, could soon receive as much as 100 billion yuan each in relending from a big state bank for equity repurchases. Those reports have not been officially confirmed.
The banks’ balancing act
The lenders being asked to help are themselves in reasonable shape. China’s big banks have reported earnings growth, with net interest income rising across the major institutions. That complicates the narrative that squeezed margins leave banks little room to fund market support. Yet the same data shows the economy offering little help. Official purchasing managers’ index readings disappointed.
For the banks, the question is how much risk they are willing to carry. Relending programmes shift part of the funding burden to the central bank, but lenders still have to find borrowers willing to buy back shares and judge the credit quality of those loans. The more generous the terms, the more likely the programme is to move the needle.
What to watch
Three signals will matter in the coming days: whether the PBOC announces changes such as a larger quota or looser terms, whether the National Team steps up buying, and whether foreign investors, who have been cautious, return. Beijing has shown in the past that it is willing to act when sentiment sours. The open question is whether another round of tools can restore confidence while the economy itself remains the underlying concern.
Summary: China’s central bank and financial regulators were set to meet major banks on Monday to discuss improving a buyback lending facility after the CSI 300’s worst month in years. Stocks rose on the reports, though no official decision had been announced.
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