China's biggest state-owned banks have lent a combined Rmb1.3tn ($209bn) to the country's margin finance agency in recent weeks to staunch a free-fall in the stock market, casting doubt on whether the recent market rebound is sustainable without government support.
China Securities Finance Corp was established in 2011 to lend to securities brokerages and support margin lending to stock investors. Amid the stock market's dramatic tumble beginning in late June, however, the government has deployed CSF as a conduit for injecting rescue funds into the stock market.
CSF has lent to brokerages to finance their stock investment and has also purchased mutual funds directly. But today's revelations indicate that state support for the stock market is much larger than previously disclosed.