State-owned enterprises helping bail out social security fund
Over the past two years, the State has transferred 1.68 trillion yuan ($260 billion) from 93 State-owned enterprises and financial agencies to the social security fund, the Ministry of Finance said on Wednesday.
The outbreak of the novel coronavirus has reduced the social security fund's income. Therefore, supplementing it with capital from State-owned enterprises and financial agencies is a timely move to guarantee the sustainability of the fund that is of vital importance to social stability.
The State-owned enterprises are legally bound to fill in the financing gaps of the fund. The Chinese society is aging at a fast rate. It is estimated that those above the age of 65 will account for 14 percent of the country's overall population next year; by 2050, China could have 500 million people aged over 60.
The social security fund's expenditure will understandably increase dramatically in the times to come. While the working age population dwindles, there is no sign that China's low birthrate, well below the basic requirement for population replacement, will rebound in the foreseeable future.
Replenishing the gradually contracting social security fund with State-owned assets can be a practical answer to meeting the aging society's challenges.
By reducing the pressure on the social security fund, the burden on individual and corporate players－the social security insurance is paid by both workers and their employers－can be eased. That will boost the average household spending capacity and reduce enterprises' operating costs as a result of a chain reaction.
It is estimated that nearly 10 trillion yuan from State-owned assets, mostly profits made by State-owned enterprises, are now available and can be transferred to the social security fund. And when and how the money can be used to supplement the social security fund is for the decision-makers to decide to maximize its functions.
In the future, the stock rights dividends of the SOEs, if needed, can also help reliably buttress the social security fund.