Roubini Sees ‘Significant’ Slowdown in China

China Tests New Orbit for Pension Plan Assets

By Lingling Wei and Owen Fletcher, Wall Street Journal, Jan. 21, 2012

BEIJING—China's policy makers approved a pilot program that would allow some local governments to entrust funds with the country's national social-security overseer, a move that could open the door to allowing billions of dollars in local funds into the nation's stock market and other areas.

Some Chinese officials have been pushing for a system that would allow local governments to take some of the nearly two trillion yuan ($317 billion) socked away in pension funds as of the end of last year and invest it in domestic stocks or other higher-yielding investments. Currently, local pension funds can park their money only in low-yielding instruments such as bank deposits and government bonds.

The effort comes as the authorities continue to look for ways to boost returns on capital sloshing around the world's No. 2 economy.

Under the plan unveiled Friday, some local governments will be allowed to entrust their funds to the council that manages the National Social Security Fund. A statement on the government's website didn't make clear how much money would be involved and what regulatory limits it might face.

But the NSSF's investments range from Chinese stocks and bonds to foreign equities. The ministry will consider certain "new channels for investment and operation" of the funds, a Ministry of Human Resources and Social Security spokesman, Yin Chengji, said on the statement online.

The plan applies to provinces that have already started trials of pension accounts for individuals, Mr. Yin said. The human resources ministry will work with the Ministry of Finance and other agencies to work out ways to boost returns on pension funds, while also ensuring the safety of the funds, he said [....]

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