BEIJING -- China's insurance companies have been allowed to finance the country's infrastructure projects, as the government moved to mobilize financial support for the huge stimulus package.
It was the first time for the country to allow the insurance fund, which mainly comes from premium of insurance holders, to invest in property projects.
China's insurance industry saw its total assets rise to 3.2 trillion yuan ($465 billion) at the end of September, and 2.88 trillion yuan of the total was used for investment.
The government would "guide insurance companies to invest, as creditors, in infrastructure projects, such as transportation, telecom and energy facilities, as well as rural infrastructure projects", said an executive meeting of the State Council presided by Premier Wen Jiabao.
Expanded investment scope for insurance companies was one of the measures adopted at the meeting to increase financing for the country's 4-trillion-yuan economic stimulus package.
A Thursday editorial of Southern Metropolis Daily regarded the expansion as a "breakthrough" in laws and regulations which restricted the insurance fund from investing in properties.
The country's insurance fund is currently allowed to invest in bank deposits, government and financial bonds, stocks, securities-oriented funds, and the latest in non-listed companies as shareholders.
Zhang Hanya, a senior researcher with the National Development and Reform Commission said the change is an implementation of the moderately loosened monetary policy.
"Financing for such projects is different from investing in these infrastructure projects," he told Xinhua. But it did indicate a relaxation of restrictions on insurance fund from investing in properties, he added.
A draft revision to the Insurance Law has been submitted to the Standing Committee of the National People's Congress in August, to allow the insurance fund to invest in properties.
Official statistics showed that about 24.5 percent of the 2.88 trillion yuan was held as bank deposits, 57.6 percent in bonds, and 14.2 percent in stocks, stakes and securities-oriented funds, by the end of September.
The average rate of yield of these investments was 2.1 percent in the first three quarters, according to the China Insurance Regulatory Commission.