SCIO briefing on actively encouraging the flow of medium- and long-term funds into the capital market and promoting its high-quality development

China Securities Journal:

The national social security fund serves as a strategic reserve fund to address population aging, which is of great significance. What specific arrangements are there for optimizing the investment assessment policies of the fund going forward? Thank you.

Liao Min:

Thank you for your question. This is a very important issue. I would like to address this question from four aspects.

The first is the positioning of the national social security fund. As you just mentioned, the national social security fund serves as a reserve fund for China's social security system. The basic principle of its investment operations is to achieve preservation and appreciation of the fund under the premise of ensuring asset safety and liquidity. The national social security fund must always adhere to this principle when conducting investments.

The second aspect is the investment allocation approach of the national social security fund. The investment structure of combining stocks and bonds is the common practice of various pension funds internationally. The moderate investment of the national social security fund in the stock market helps broaden channels for fund appreciation and enhances investment allocation flexibility. The current investment management policy sets a ceiling on the proportion of stock investments by the national social security fund, while ensuring that the scale of its stock investment is maintained at a reasonable level. Currently, the national social security fund maintains a stock-to-bond investment ratio of roughly 40:60, representing a well-balanced allocation. Since its establishment, the fund has generated stable investment returns and demonstrated strong performance. Mr. Wu has already provided a detailed overview of this matter, so I will not reiterate it here.

The third aspect is the relationship between the national social security fund and the capital market. From the perspective of the operation rules of the capital market, the capital market, including bonds and stocks, and the national social security fund can complement each other. As an important investor in the capital market, the long-term and stable investment strategy of the national social security fund helps to promote the healthy operation of the capital market, which in turn can enhance the fund's own investment returns, so a virtuous cycle can be formed between the two. Past investment results have also demonstrated this effect.

The fourth aspect is on strengthening the national social security fund with central government fiscal support. The MOF, as the supervisory department of the National Council for Social Security Fund, will continue to provide ongoing replenishment to the national social security fund. While strengthening the fund's guarantee capacity, the ministry will support the injected funds to increase their investment in the capital market. More flexible stock investment portfolios will also be adopted to provide sustained support for the sound development of the capital market, thereby achieving a win-win outcome of preserving and increasing the fund's value while promoting stable capital market operations.

Going forward, the MOF will promptly implement the plan. Additionally, regarding specific follow-up arrangements, we are expediting work in two areas.

First, we are optimizing and improving the national social security fund investment management system. We have revised the relevant management measures for domestic investment by the national social security fund and solicited comments from the public. The MOF is now actively reviewing and incorporating the feedback from various sectors of society. After completing the required procedures, it will be formally released to the public as soon as possible. The revised measures incorporate the latest developments in financial markets, optimize the proportions of different investment categories, and further enhance the intensity and flexibility of national social security fund investments.

Second, we are improving the long-cycle assessment system for national social security fund investment operations. We are working to improve the long-cycle assessment system for the national social security fund by refining and enhancing the requirements for long-cycle assessment mechanisms of five years or more. The plan is to evaluate fund investment operations from different dimensions, including risk management, value preservation and appreciation. This will balance short-term investment returns with long-term value preservation and appreciation goals. This will strengthen the long-cycle investment philosophy and provide strong, sustained support for the long-term, stable and healthy development of China's capital market. Thank you for your question.