In the past 30 years, US capital markets developed thanks to the support of these funds and also gave profitable returns to Americans.

It can be perceived that the relationship between pension system, social security system and capital markets should be interactive and tight.

Unfortunately, in China the staff in the pension and social security systems are mainly busy robbing Peter to pay Paul. One of my former colleagues who works in local government tells me that the pension funds in his province are "firmly forbidden to invest in the stock market."

Building a beneficial interaction between pension system and the capital markets is a long term project.

Eight years ago, when I was working in the fund department under China Securities Regulatory Commission, I received a deputy director from a relevant ministry, who visited my department to discuss the relationship between the pension system and the capital markets.

We had a great talk and he promised that he would report some ideas to his boss. However, I have heard nothing since.

Nowadays, with an aging society, China urgently needs to tackle inflation.

At the same time, gradual reforms have brought an increasing awareness of the market. The sustainable development of domestic capital markets faces a big challenge, since it has lacked financial support for a long time.

So, it is an urgent task to consider how to make full use of the advantages of the socialist market economy to promote a combination of the capital markets and pension system with support from both government and financial institutions.

The author is director of the research center at the China Securities Regulatory Commission. opinion@globaltimes.com.cn