(Yicai) Sept. 9 -- China has begun deploying the first tranche of this year’s CNY800 billion (USD119.3 billion) new financing instrument, which could help unlock about CNY10 trillion (USD1.49 trillion) in total project investment as part of government efforts to steady investment and support growth.

The Zhejiang provincial branch of Agricultural Development Bank of China allocated CNY300 million (USD44.7 million) from the New Policy-Based Financing Instrument for 2026 to support construction of a pumped-storage power station on Sept. 1. Since then, ADBC and the country’s two other policy banks -- China Development Bank and Export-Import Bank of China -- have disbursed funds to around a dozen projects in a number of provinces.

The New instrument is intended to supplement project capital and unblock financing bottlenecks, thereby quickly moving more projects from planning to construction, according to Zhang Xu, chief fixed income analyst at Everbright Securities.

Assuming it can leverage external investment at roughly 13 times its own size, this year’s funding could support around CNY10 trillion of total project investment, Zhang said, noting that the funds could be fully disbursed within the next one to two months if the speed of last year’s allocation is anything to go by.

The new instrument was first launched last September by the National Development and Reform Commission, with an initial CNY500 billion, and it operates through dedicated funds established by the three policy banks.

Rather than simply lending money to projects, the funds can provide capital through equity investments, shareholder loans, and similar mechanisms. By strengthening a project's capital base, the funds can help unlock additional bank loans and private investment. They can exit projects once agreed conditions or time periods are met.

The central bank can provide longer-term, lower-cost funding to the new instrument through structural monetary policy tools, including pledged supplementary lending.

The type of projects supported by the new tool is changing, said Zhang Lin, deputy director and chief macroeconomic researcher at the Far East Credit Rating Research Institute. While previous rounds mainly focused on infrastructure, this year’s funding tilts toward new energy, the digital economy, artificial intelligence, and the low-altitude economy, reflecting a dual focus on stabilizing growth and optimizing China’s economic structure, he said.

Editors: Tang Shihua, Martin Kadiev