(Yicai Global) Aug. 29 -- Two Chinese policy banks have used up all of the first CNY300 billion (USD43.4 billion) lending quota in less than 60 days after the cabinet revealed the tools to support infrastructure investments.

The China Development Bank issued CNY210 billion of the headline sum of policy and development tools, People's Daily reported recently. The Agricultural Development Bank of China took care of the remainder, the Economic Information Daily wrote. Chinese policy banks, controlled by the State Council, provide targeted loans for strategic areas.

On Aug. 24, the State Council reiterated an addition of over CNY300 billion in the quota of financial tools for policy and development to build new infrastructure and other major projects after first announcing the sum on June 29. On June 1, it had revealed an increase of CNY800 billion in policy banks' lending quotas.

The need to stabilize economic recovery has become apparent in China's monetary policy. This month, the central bank released two medium-term lending facility rate decreases and a cut in loan prime rate to stimulate growth.

The latest CNY300 billion boost made the total amount of such financing instruments rise to CNY1.4 trillion (USD202.5 billion), according to rating agency Golden Credit Rating International. The increase is set to drive from CNY1 trillion to CNY1.5 trillion in funds to support accelerated infrastructure investments.

The money should help kick-start major projects. In 1996, the central government started a trial mechanism to require investment projects to raise capital before beginning construction, which has become a bottleneck, said Zhang Xu, chief fixed-income analyst at Everbright Securities. But financial tools can quickly supply capital as the economy is facing downfall pressures and there is a need for an expansion of effective investments, employment, and consumption, Zhang added.

The funds are used to support more than 500 projects in the fields of municipal and industrial parks, transportation, agriculture, rural infrastructure, as well as energy, the ADBC said. The CDB said the money goes into over 420 projects covering key areas of infrastructure, scientific and technological innovation, vocational education, and local government special bonds.

Editor: Emmi Laine, Xiao Yi