Beijing Review – August 15, 2019

36 BEIJING REVIEW AUGUST 15, 2019 http://www.bjreview.com

BUSINESS

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s the Chinese Government moves to
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by reducing their contributions to so-
cial insurance schemes, new measures have
been issued to support this move. On July 10,
a State Council executive meeting decided
to further intensify the transfer of state capi-
tal into the social security funds.
The third batch of 35 state-owned enter-
prises (SOEs) will transfer assets to the funds,
bringing the total of the 59 SOEs overseen
by the State-Owned Assets Supervision and
Administration Commission of the State
Council (SASAC) in three batches to an es-
timated transfer of 660 billion yuan ($95.8
billion), said Lu Qingping, head of the Asset
Management Department of the Ministry of
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on July 19.

Nationwide implementation

In 2018, two batches totaling 18 of SASAC-
administered SOEs and six financial
institutions supervised by the MOF trans-
ferred 130 billion yuan ($18.9 billion) of state
capital to the pension funds, according to a
report by 21st Century Business Herald. This
was in response to a plan issued by the State
Council at the end of 2017. According to the
plan, state-owned and state-holding large
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institutions should transfer 10 percent of
their shares to the social security funds.
The National Council for Social Security
Fund (SSF) is authorized to hold the shares
of centrally administered SOEs. The plan
said the council can set up a pension man-
agement company specially operating the
transferred shares when conditions are
mature. Provincial governments can estab-
lish state-owned companies to manage the
shares of local SOEs or entrust companies
that have the capacity to run state-owned
assets to manage the transferred shares.
For example, China Reinsurance (Group)

Corp. announced in April 2018 that its

second largest shareholder, the MOF, was

transferring 10 percent of the equity it held

in the company to the SSF on a one-time

basis.

In December 2018, the People’s

Insurance Co. (Group) of China Ltd. (PICC)

also announced that the MOF was transfer-

ring 10 percent of its equity in the company

to the SSF.

“There were transition costs when China

started the reform of the social security

system in 1997. However, it was hard to

properly estimate such costs beforehand,

leading to a heavy burden on the entire

pension insurance system,” Zhu Junsheng,

Deputy Director of the Insurance Research

Office under the Development Research

Center of the State Council, told 21st

Century Business Herald.

“The government has recently reduced

the corporate social security contributions to

alleviate their burden. Against this backdrop,

speeding up the replenishment of the social

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capital is the only solution to make the funds

sustainable,” Zhu said.

In his Report on the Work of the

Government to this year’s session of the

National People’s Congress, China’s top legis-

lature, in March, Premier Li Keqiang said the

tax burdens on and social insurance contri-

butions of enterprises will be cut by nearly 2

trillion yuan ($298 billion) this year.

Since May, employers’ share of endow-

ment insurance for urban workers has been

reduced to 16 percent from 20 percent na-

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New Pension Source

More state assets will be transferred to China’s pension system

for replenishment By Wang Jun

XIN

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