(ECNS) -- China's Ministry of Finance denied on Wednesday a previous report that the government has set out a plan to convert state capital into social security funds.
China is still doing research about it, Beijing Youth Daily cited an official from the Ministry of Finance as saying.
According to the ministry, when the nation's Social Security Fund (SSF) was established, its funding sources included central government allocations, incomes from reduction and transfer of government stakes in State-owned enterprises (SOEs), lottery incomes and investment returns.
When the government reduces its stake in an SOE, part of the income is used to replenish the SSF, said an official with the Finance Ministry, adding that incomes from reduction and transfer of government stakes in SOEs have played an important role in supplementing SFF funds.
However, with China's SOE reforms nearing their end, such funding sources are becoming exhausted, and the SSF needs to look for new fundraising channels. A decision on deepening China's overall reforms passed by the Third Plenary Session of the 18th Communist Party of China Central Committee has proposed the transfer of State-owned capital as a way to replenish the SSF.
Su Hainan, vice president of the China Association for Labor Studies, suggests central and local governments choose large centrally-administered or local SOEs with sound and stable annual incomes and transfer part of State-owned stakes in these to the SSF to ensure new sources for stable funding.
According to the Ministry of Human Resources and Social Security, the ongoing study is led by the Finance Ministry and jointly pushed ahead by the State-owned Assets Supervision and Administration Commission of the State Council, the Ministry of Human Resources and Social Security, the National Council for Social Security Fund and the China Securities Regulatory Commission. A special task force has been formed by relevant departments and a work mechanism is also in place.
In March, East China's Shandong province released a plan to transfer 30 percent of the government-held stakes in provincial SOEs to the local SSF, the report states.
Chinese media reports said on Tuesday the national SSF budget for 2015 released recently indicates that China's pension system would face a shortage of 302.5 billion yuan ($48.7 billion) this year if government subsidies are not taken into account, a remarkable increase from the 156.3 billion yuan in 2014, and that the country has begun to implement a plan to transfer State-owned capital to the SSF in order to fill the gap and ease government subsidy pressures.
