The Ministry of Human Resources and Social Security announced in October it will begin commercial management of the basic pension fund in 2016. The policy might be implemented soon because different departments are drafting plans.

The pension fund of the nation is expected to exceed 2 trillion yuan ($300 billion); if 30 percent is invested in the stock market, that would be 600 billion yuan. In the past the money could only be used to purchase government debts or be deposited in stable bank accounts; now it can be invested in secure programs that can ensure profits.

The money is generally expected to inject liquidity into the A-share market and increase the percentage of institutional investors in it, which help make investors more rational in general. But it is wrong to imagine the A-share market will rise abruptly because it requires complicated procedures for the pension fund to truly enter the stock market.

Actually, it is a common practice in Western countries, such as the United States, to invest part of their pension funds in the stock market. This hardly pushes the stock market much, rather it helps stabilize the stock market.

(China Daily 12/31/2015 page8)