The winds haven't been blowing very favorably for the Chinese economy. The "Zero-Covid" and the effects of the pandemic, the trade war with the U.S. and the invasion of Ukraine on the global economy have hit the Asian giant’s economy. The Chinese government has decided to turn to a classic tool to counter these headwinds: boosting investment in infrastructure. A strategy that, incidentally, is music to the ears of commodity-exporting countries, such as Chile.

The problem is that the central government lacks the funds to finance this strategy. To solve the problem, it has decided to resort to another classic approach: opening the floodgates of funding from state-owned banks. The Council of State ordered in late May that US$120,000 millones be made available to finance infrastructure projects.

The funds will come primarily from the China Development Bank, the Agricultural Development Bank of China and the Export-Import Bank of China. The funds are expected to come from bond issuance and a possible reduction in the People’s Bank of China regarding the reserve ratio that banks must maintain.