Export-Import Bank of China (EximBank) will lend $1.2 billion to German shipping firms Peter Dohle Shiffahrts-KG and Bernhard Schulte for the purchase of Chinese ships, the official Xinhua news agency reported.

The deal will increase chances that German shipping firms will purchase more China-made ships, Xinhua reported the EximBank as saying.

A prolonged slump in shipping and pressure to shrink bloated loan books have forced many European banks to abandon or scale down lending to the sector.

The EximBank loan deal was signed during Chinese President Xi Jinping's state visit to Germany.