China's high savings rate and sound public
finances offer the right conditions for the authorities to proceed with social
security and healthcare system reforms, People's Bank of China Governor Zhou
Speaking to the Xinhua News Agency in Sydney, where he was attending a Group
of 20 meeting of finance ministers and central bankers, the head of China's
central bank said the nation's social security system should include all members
Social security fund reform should involve government support, individual
accounts and commercial insurance, Xinhua quoted Zhou as saying.
People with adequate savings should be encouraged to invest in personal
pension and medical insurance schemes, Zhou said, stressing that the government
should offer more support to poorer citizens.
The central bank governor said that pension funds, which are currently mainly
held by banks, should be invested in capital markets to increase their value and
generate higher returns.
The government is currently working on a plan to transfer 10 per cent of any
domestic shares in listed State-owned companies to the national pension fund,
the National Council for Social Security Fund.
The council, which had total assets of 230 billion yuan (US$29 billion) at
the end of August, currently invests mainly in bonds and bank deposits and is
planning to start overseas investment in the near future.
Zhou said the current healthy state of the nation's finances also offered
good opportunities for further steps to be taken in foreign exchange rate
He added that the nation's financial sector was now in a much stronger
position than it was three or four years ago, noting that it was now better
equipped to cope with interest rate reform and a more flexible yuan.
In another development, the People's Bank of China announced yesterday it had
opened a representative office for the South Pacific in Sydney.
The office will improve communications with monetary authorities in the
region and promote financial co-operation, the central bank said.
(China Daily 11/21/2006 page9)
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