Chinese provinces pumped a record Rmb218.3bn ($31bn) of capital into fragile regional banks last year using special-purpose bonds, in a sign of concern at the risks within one of the world’s most important financial systems.

Sales of bonds that are used to boost the capital buffers of regional lenders more than tripled in 2023 from the previous year, according to data from Chinese financial data provider Wind.

The bonds, which are sold by local governments and whose proceeds can only be used to put capital into banks, are also being used to hasten mergers of weak lenders in China’s indebted regions, which are struggling to cope with a long-running property sector crisis. The bonds were introduced in 2020 to help banks through the Covid pandemic.