Sinopec employees inspect gas pipes in Puyang, Henan Province. (Photo by Tong Jiang/For China Daily)
At a working conference of the State Council, China's Cabinet, on Wednesday, it was decided that 10 percent of the shares of domestic large-and medium-sized State-owned enterprises will be transferred to the social security fund. Beijing News comments:
State capital belongs to the people and should benefit all members of society. It is also the common practice of developed countries to supplement social security fund with State-controlled capital.
After the money is transferred, the SOEs will enjoy the rights and profits as financial investors, while the social security fund will be strengthened.
Before the move, the social security fund mainly relied on enterprises and fees paid by individuals plus financial subsidies.
Especially, in the past round of SOE reform, many retirees were allowed to get their pensions without ever paying for them, which means the whole society subsidized the SOEs. Now the SOEs are flourishing and it is time they render some help back to society.
Money from the SOEs has long been considered an important way to supplement the social security fund. However, progress in achieving this goal has been rather slow. According to a national audit report, at the end of March this year, only 113.2 billion yuan ($16.42 billion) of 23 SOEs had been transferred to the social security fund, which accounts for less than 10 percent of the planned total. Only four provinces had started the job.
There are vested interests behind this. For example, certain local governments have provided support to SOEs, and they are reluctant to transfer the money. The State Council's all-around push is expected to break the current stalemate, which should boost the public's confidence in the future.
Particularly as before the move, a series of systemic regulations had already been published, which have laid a solid foundation and provided legal support for the move.
Besides, the 10 percent as an equal standard for all also makes it easy to get support from the SOEs, because that's fair for all, and no one will worry about paying too much.
To sum up, the State Council's move marks the start of comprehensively transferring State capital to supplement the social security fund. With the support of immense State capital, the social security fund will be more sustainable, which in turn grants the public a better sense of security.
