This chapter argues that the capacity of the Chinese state in mobilizing finance for its twin policy banks offers an indirect explanation for why CDB and CHEXIM comply with the state’s priorities. This capacity, as this chapter shows, manifests itself in the sovereign credit rating the China Banking Regulatory Commission (CBRC) and its successor China Banking and Insurance Regulatory Commission (CBIRC) extend to the two policy banks in the debt market and direct capital injection by the state coffers, the Ministry of Finance, and its centra bank, the People’s Bank of China. Because CDB and CHEXIM are barred from engaging in personal and retail banking, the state’s direct and indirect financial support is thus key to their expansion in loan financing both at home and abroad.
KeywordsSovereign credit rating Capital injection State-owned commercial banks Leader of the last resort
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