China’s central bank is giving the green light to Chinese banks to give a $1.7 billion loan to six Chinese companies that will buy up about US$50 billion of their own shares.
The announcement by the People’s Bank of China, the country’s central lender, comes after the central bank approved the purchase of more than $300 billion in US Treasury bonds and other debt on Thursday.
It is part of a broader package of government support for the Chinese economy, which has been hit hard by the global economic downturn.
A separate announcement this week of a $20 billion US-China investment package was announced by President Xi Jinping, who has vowed to keep China close to its global economic path.
The central bank has been slow to support Chinese businesses, partly due to concerns about slowing growth in emerging markets.
But it has recently boosted lending and other economic activity to the benefit of China’s exports.
China’s government is also helping the country to develop its industrial base, which could boost exports.
The deal with Chinese lenders will help to improve China’s infrastructure.
A number of banks, including Credit Suisse, Goldman Sachs, JPMorgan Chase and Deutsche Bank, have announced major infrastructure projects in China.