What Is the National Social Security Fund (China)?

The National Social Security Fund in China is a government-run investment fund established primarily to provide a reserve of funds for China's social security system. The fund is managed by the National Council for Social Security Fund. According to the council's annual report, the fund held 2.24 trillion RMB in assets (US$320 billion) at the end of 2018.

Key Takeaways

  • China's National Social Security Fund had $320 billion in assets at the end of 2018.
  • The National Council for Social Security Fund oversees management of the assets.
  • The fund provides Chinese workers with social security income.

Understanding China's National Social Security Fund

On August 1, 2000, the Central Committee of the Communist Party of China and the State Council established the National Social Security Fund, along with the National Council for Social Security Fund to oversee its assets. The council is a ministerial-level agency directly under the State Council.

The National Council for Social Security Fund works with the State Council to manage old-age pension funds on behalf of provincial governments. Its asset base consists of allocations from the central government, transfers of state-owned assets, investment income, and funds raised via other methods approved by the State Council. It has managed pensions for Guangdong Province since 2012 and Shandong Province since 2015.

Inside the Fund

The National Council for Social Security Fund is run by a board of directors composed of a chairman, deputy directors, and directors, all of whom are appointed by the State Council. The council either invests in assets directly, or manages assets entrusted to the fund. Its direct investments primarily include bank deposits, trust loans, equity investments, transfers of state-owned shares, and indexed stock investments. Entrusted assets include domestic and overseas stocks, bonds, investment funds, and derivatives such as swaps and forwards.

The fund is invested approximately 92% in China and 8% overseas.

At the end of 2018, assets held by the National Social Security Fund totaled 2.24 trillion RMB (US$320 billion). This is roughly in line with what it held at the end of 2017.

Roughly 2.06 trillion RMB in assets, or 92.2% of the total, were invested in China. About 174.4 billion RMB, or 7.8%, was held overseas. In 2018, equity investment income fell by 47.7 billion RMB. The fund claims a 7.82% average annual return on investment since its founding and a cumulative return of 955 billion RMB.