Liu Jiafu, vice director of the Debt and Finance Department of the Ministry of Finance, said when the government gives the go-ahead for some of the pension funds to be invested in domestic stocks, foreign firms will be allowed to manage a portion, the Business Weekly magazine said.

Liu said the draft regulations on stock market investment by social security funds have been sent to the State Council for final approval and that if "everything goes smoothly, the regulation will be unveiled before October", he said.

The "regulation will outline a detailed policy for the involvement of foreign fund management companies in the market," he said.

Foreign and domestic companies would be treated on "an equal footing" with the selection of candidates to manage the funds being made by the State Social Security Fund Management Council.

The vast bulk of China's pension funds are currently held in bank deposits and treasury bonds, which generate very low yields.

China has begun a drive to reform the system to allow pension plans to pay higher returns in future while curbing financial risk.

(China Daily 06/26/2001)