March 16, 2012
Translated By Zhu Na

In 2011, China's Social Security Fund earned returns of only 7.4 billion yuan on its investments, with losses of 35.7 billion yuan in its investments in the stock exchange being offset by 43.1 billion in returns on investments in other asset classes. This represented a rate of return of 0.85 percent.

The rate of return is down from the 4.23 percent earned in 2010 and the 16.12 percent registered in 2009.

According to Dai Xianglong (戴相龙), the chairman of China's National Council for Social Security Fund (NCSSF), China's social security fund has earned 132.6 billion yuan through its investment in both the mainland and Hong Kong stock markets over the past eight years, accounting for 46 percent of the fund's total investment income over the same period.

Dai Xianglong told a meeting in Beijing yesterday that the fund had achieved an annualized rate of return of 18.61 percent over the same period.

China's social security fund began to invest in the stock market in June 2003. From 2003 to 2011, an average of close to 20 percent of the fund's total assets have been invested in the stock market, though almost a third of the funds assets were invested in the stock market last year

Dai reported that assets under management had reached 868.9 billion yuan by the end of 2011, with direct investment assets totaling 504.2 billion yuan, or 58.03 percent of the total, and entrusted investment assets making up the remaining 364.7 billion yuan.

Just over 50 percent of assests had been invested in fixed-income products, 32.39 percent in stocks; 16.31 percent in industry and 0.64 percent in cash and equivalents.

Official data revealed that from 2001 to 2011, China's national social security fund earned 284.7 billion yuan in investment income, which equates to an annualized rate of return of 8.41 percent, 6 percentage points above the average rate of inflation over the same period.

Dai remarked that although returns on stock market investments can be volatile, as long as the fund buys at reasonable prices and maintains a long-term investment outlook,  it will still be able to earn higher returns than through fixed-income products.

Links and Sources
NCSSF: 国社会保障基金理事会召开第四届理事大会第二次会议
The Beijing News: 社保基金近半收益来自炒股