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 as there
are concerns that the state might lose its controlling stake in
these firms if shares are sold at a later date.
According to the Financial Times, SASAC will allocate
10 percent of any domestic shares issued 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.
"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 percent 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 percent 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 have SOEs pay dividends, in order to raise more funds to further
strengthen the social security network.
(China Daily October 26, 2006)