The Chinese Government is working on a plan to transfer some shares in listed
State-owned enterprises (SOEs) to the national pension fund, part of an effort
to boost the fund and improve the management of SOEs.
The State-owned Assets Supervision and Administration Commission (SASAC),
which oversees the assets of central SOEs on behalf of the central government,
is in talks with the Ministry of Finance and the China Securities Regulatory
Commission (CSRC) about the plan, said SASAC official Su Guifeng.
"But the proportion of shares to go to the national pension fund has not been
decided yet," added Su.
But insiders said that the proportion would not be high, amid concerns that
the State may lose its controlling stake in these firms if the pension fund sold
the shares at a later date.
According to the Financial Times, SASAC will allocate 10 per cent of any
domestic share issue by SOEs to the pension fund.
This will come as a much-needed injection of assets to China's national
pension fund, as the nation comes to terms with an increasingly ageing society.
Meanwhile, it is hoped that the move will also improve the market discipline
of SOE managers, because the pension fund would in theory be more concerned
about share price performance than other government bodies.
The government proposed a similar transfer of assets to the pension fund in
2001, but the plan was dropped after the stock market fell sharply amid fears
that it would result in a flood of new shares onto the market.
But Standard Chartered researcher Jason Chang insisted that the stock market
could cope with this sort of injection of assets.
"And I don't think the influx of those shares was the fundamental reason for
the collapse of the stock market four years ago," Chang added.
CSRC Vice-Chairman Fan Fuchun told reporters during the annual session of the
National People's Congress in March that the plan to transfer SOE shares to the
national pension fund was proceeding smoothly.
He also implied that the sale of those shares would be prohibited for a given
period of time to prevent a flood of shares going on the market at once.
Statistics show that China currently has over 1,300 listed companies, among
which 900 are State-controlled or with the State holding a stake in them. The 10
per cent allocation from all listed SOEs means that around 340 billion shares
would be transferred to the national pension fund.
Experts believe the share transfer could be the first step in a broader
injection of State assets into the pension system.
For the past year, State-owned companies listing overseas have been required
to allocate 10 per cent of new shares to the National Council for Social
Security Fund, the central government-run pension fund.
SASAC and the Ministry of Finance are also working on a proposal to ask SOEs
to pay dividends, in order to raise funds to strengthen the social security