China’s social security fund will start investing overseas by
the end of this year with Hong Kong as its first destination,”
Xiang Huaicheng, chairman of the National Council of Social
Security Fund (NCSSF) said on May 27 in a speech to the Central
University of Finance and Economics, Beijing Business Today
reported on May 30.
The State Council has received the NCSSF's application for
investing overseas and is expected to implement temporary measures
soon, Xiang said. He added that if nothing goes wrong, the social
security fund will venture into overseas investments this year.
Operations, investment items and ratios should be stipulated in
the temporary measures.
The first rule to investing overseas, Xiang explained, is
dispersing risks; second, the difference between the Chinese and
international capital markets should mean stable profits; and
third, it is a common practice.
“There is a deficit of 720 billion yuan (US$87 billion) in the
individual account of the social security fund,” Xiang
disclosed.
Due to the rapid growth of China's ageing population, income is
not on par with expenditure, hence the huge deficit. So, it is
critical that China minimizes the deficit.
Xiang’s personal opinion is “strengthening the fund is better
than allowing it to continue to weaken, and it’s better to do so
earlier rather than later.”
(China.org.cn by Zhang Tingting, June 3, 2005)