This marks the second time that Beijing has stepped in with a hefty capital infusion to rescue its state-owned banks bogged down by non-performing loans which analysts say could amount to 50 percent of all lending in the country.
In 1998, the Chinese government raised a special 270 billion yuan ($32.5 billion) bond to help four of its largest state-owned banks - Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China.
Yukon Huang, the World Bank's country director for China, said the country could afford the latest aid but it would raise its ratio of debt to gross domestic product.
He expects the Chinese debt-to-GDP ratio to expand by 10 percentage points to 35 percent in five years' time.
"China's debt to GDP is still low," Huang told an economic conference held in the Malaysian capital. "The average country ratio is about 100 percent".
"If they (the banks) continue to generate losses over the next five to six years, they can be re-capitalised again. But then, they might have a national fiscal financial crisis."
Huang said the re-capitalisation was carried out a few days ago, but did not say which banks were involved or give details on how the infusion was carried out.
Beijing, which had foreign reserves of $401 billion at end-October, aims to cut the average bad loan ratio of the Big Four banks to 15 percent by 2005 to help them list shares eventually.
The government says about 24 percent of the Big Four's loans are non-performing, but ratings agency Standard & Poor's has said bad loans could account for 50 percent of all lending.
Outstanding loans amounted to nearly $2 trillion, or about 150 percent of GDP, according to central bank data last June.
Chinese lenders have embarked on a lending spree as consumer deposits jumped, in stark contrast with several years ago, when obsession with bad-debt risk control caused banks to tighten their purse strings.
The Asian Development Bank, which foresees 7.8 percent GDP growth in 2003, expects China's economy to expand 7.9 percent in 2004, boosted by continued strong investment flows and a rise in consumer demand following the suppression of the Sars outbreak.