The 2018 programme to transfer 10% of centrally-administered state enterprises’ equity to the national pension fund is now completed, the Ministry of Finance has said.
In the last three years, hundreds of state-owned enterprises (SOEs) have transferred part of their assets to social security funds as part of the blueprint for mixed-ownership reform and reorganisation of SOEs.
China’s 93 biggest state-owned companies pumped in stakes worth a total of CNY1.68tn ($260bn), reported China Global Television Network (CGTN). Among the 93 companies were major names like the People’s Insurance Company of China, China Petrochemical Corporation, and the Industrial and Commercial Bank of China.
The CNY1.68tn asset transfer is just the first step. It’s not enough to fill a CNY730bn pension deficit every year.
“The State Council made it clear at the end of 2017 that the entities which would make the asset transfers include central and local state firms, state-controlled big and medium-sized firms and financial bodies. By the end of 2020, the central SOEs’ transfers had been completed,” said Du Tianjia, head of the Asset Operation Research Department, Research Centre of State-Owned Assets Supervision and Administration.
The purpose of the transfers is to fill shortfalls in the nation’s pension scheme. A rapidly aging population and a shrinking workforce indicate that more pension payments would be made while contributions would decline.
“From now up to 2030, the number people aged above 55 will increase by 124m in China …the flip side is that, by 2030, the number of people aged below 35 will decline by 46m as a result of population aging,” Robin Xing, chief China economist at Morgan Stanley, told CGTN.