State Council Announces Measures to Guide Long-term Capital into Markets
Directing public mutual funds, commercial insurance funds, and pension funds into A-shares market
I got a cold and didn’t plan for another update for this week. However, there are some interesting points in today’s State Council press release that are worth an extra episode.
On the morning of January 23, the State Council held a press conference to introduce the "Implementation Plan for Promoting Medium and Long-term Capital Market Investment" issued by six ministries and commissions (CSRC, Ministry of Finance, Ministry of Human Resources and Social Security, People's Bank of China, Financial Regulatory Administration, and Central Financial Commission Office) on January 22.
The Plan calls for steadily increasing the proportion of equity investments in the National Social Security Fund and promoting the entry of medium and long-term capital from public mutual funds, commercial insurance funds, and pension funds into the market. The Plan requires public mutual funds to increase their A-share tradable market value holdings by at least 10% annually over the next three years. For commercial insurance funds, large state-owned insurance companies are expected to invest 30% of their new premium income into A-shares starting in 2025. The second batch of insurance funds' long-term stock investment pilot program will be implemented in the first half of 2025, with a scale of no less than 100 billion yuan, and will gradually expand thereafter.
Secondly, the Plan reforms the assessment cycle, requiring investment performance evaluations for the National Social Security Fund to be conducted over five years or longer. Public funds, commercial insurance funds, and pension funds will be evaluated over three years or longer. State-owned commercial insurance companies are required to lower the weighting of annual business performance indicators in their assessments. These measures aim to improve medium—and long-term capital investment returns.
Some Highlights:
Public mutual funds must increase their A-share tradable market value holdings by at least 10% annually over the next three years
Large state-owned insurance companies are encouraged to invest 30% of new premium income into A-shares starting from 2025, which will inject hundreds of billions yuan of long-term capital into A-shares annually
The second batch of insurance funds' long-term stock investment pilot program will be implemented in the first half of 2025, with a minimum scale of 100 billion yuan, and will gradually expand
A preliminary reform plan for public mutual funds has been formulated
Starting in 2025, fund sales fees will be further reduced, expected to save investors approximately 45 billion yuan annually
Strengthen guidance and constraints on fund investment trading behavior, correct excessive speculative behaviors such as "high turnover rates" and "style drift"
Listed companies paid 2.4 trillion yuan in dividends and 147.6 billion yuan in share buybacks last year, reaching historic highs
In December last year and January this year, over 310 companies are expected to implement pre-Spring Festival dividends, amounting to about 340 billion yuan, representing 9 times the number of companies and 7.6 times the amount compared to the same period last year
Insurance asset management and bank wealth management products will receive equal policy treatment as public funds in areas such as new share subscriptions, listed company private placements, and stake-building threshold standards, actively supporting related capital market investment
Make full use of the central bank's swap facility tools and explore regular institutional arrangements with the People's Bank of China
Support securities and fund institutions in conducting mergers and reorganizations based on market principles, building first-class investment banks and investment institutions
Over its 20+ years since establishment, the National Social Security Fund has achieved an average annual return of 11.6% from A-share investments (currently, the Fund's investment ratio between stocks and bonds is approximately 40:60)
Below is the transcript of the press release, source: CSRC
Participants:
• Wu Qing - Chairman, China Securities Regulatory Commission (CSRC)
• Liao Min - Vice Minister, Ministry of Finance
• Li Zhong - Vice Minister, Ministry of Human Resources and Social Security
• Zou Lan - Member of the Party Committee, People's Bank of China (PBOC)
• Xiao Yuanqi - Vice Chairman, National Financial Regulatory Administration (NFRA)
CSRC Chairman Wu Qing:
Thank you. Ladies and gentlemen, members of the media, good morning! As the Year of the Snake approaches, I'm delighted to meet with you again at the State Council Information Office. Let me take this opportunity to extend my early New Year wishes and express gratitude for your long-standing support of our capital markets. Today is the twenty-fourth day of the final lunar month - Little New Year in the South, while yesterday was Little New Year in the North. Important matters cannot wait overnight, let alone until after the New Year, so we must act with urgency.
Today's press conference comes after the Central Financial Committee's approval of the 'Implementation Plan for Promoting Medium and Long-term Capital Market Investment,' jointly issued by six departments. The press release was distributed yesterday afternoon. Today, together with officials from the Ministry of Finance, Ministry of Human Resources and Social Security, People's Bank of China, and National Financial Regulatory Administration who helped draft this Implementation Plan, we will explain its background, main contents, and related work, and address your questions.
As we all know, medium and long-term capital represents a crucial professional investment force in capital markets and serves as the "ballast" and "stabilizer" for maintaining stable, healthy market operations. The CPC Central Committee with Comrade Xi Jinping at its core places high importance on promoting medium and long-term capital market investment. The Third Plenary Session of the 20th CPC Central Committee explicitly proposed improving capital market functions that coordinate investment and financing, while supporting long-term capital market investment. Both the September 26th Political Bureau meeting and subsequent Central Economic Work Conference made very clear arrangements, emphasizing the need to stabilize the stock market, deepen comprehensive capital market investment and financing reform, and remove obstacles blocking medium and long-term capital market investment.
In late September, the Central Financial Office and CSRC jointly issued the 'Guiding Opinions on Promoting Medium and Long-term Capital Market Investment,' clarifying key work arrangements for promoting various types of medium and long-term capital market investment and constructing an institutional environment for "long money, long investment." The implementation of these Guiding Opinions and supporting monetary policy tools has effectively supported market stability and promoted market recovery.
This Implementation Plan represents both another important measure to thoroughly implement the Central Committee's decisions regarding medium and long-term capital market investment and a refinement and concrete implementation of the earlier Guiding Opinions. The Implementation Plan focuses on addressing obstacles blocking mutual funds, commercial insurance funds, pension funds, and other medium and long-term capital from entering the market. It proposes a series of specific measures that are both immediate and forward-looking, establishing concrete targets for various types of long-term capital to increase A-share investment scale and proportions, while making targeted institutional arrangements for establishing evaluation systems compatible with long-term investment, investment policies, and market ecosystem construction. It can be said to be full of "substantial content." Here are several key points:
Increasing actual investment proportions. After careful study and demonstration, we've established specific arrangements for steadily increasing the scale and proportion of medium and long-term capital investment in A-shares. For mutual funds, we've specified that their holdings of tradable A-shares must grow by at least 10% annually over the next three years. For commercial insurance funds, we aim to have large state-owned insurance companies invest 30% of new premium income in A-shares starting from 2025, which will mean at least hundreds of billions of yuan in new long-term capital annually. The second batch of insurance funds' long-term stock investment pilot program will be implemented in the first half of 2025, with a minimum scale of 100 billion yuan, and will gradually expand.
Extended evaluation periods. Short evaluation cycles have long been a major obstacle preventing commercial insurance funds, pension funds, and other medium and long-term capital from expanding A-share investment. Implementing longer evaluation cycles can effectively smooth out the impact of short-term market fluctuations on performance. While the capital is inherently long-term, short evaluation periods make long-term investment difficult. Through adjusting evaluation periods, we can enhance the stability of medium and long-term investment behavior. This Implementation Plan further proposes comprehensive establishment of evaluation cycles of three years or longer for mutual funds, state-owned commercial insurance companies, basic pension insurance funds, and enterprise annuity funds. It significantly reduces the weighting of annual operating indicators in evaluating state-owned commercial insurance companies and specifies five-year-plus evaluation arrangements for the National Social Security Fund. For medium and long-term capital market investment, this represents a very important institutional breakthrough, resolving an issue that has needed addressing for many years. Both domestic and international experience shows this will help improve investment returns for various types of medium and long-term capital, achieving win-win outcomes. For example, the National Social Security Fund is the most active true long-term participant in domestic stock investment, achieving an average annual return of 11.6% on A-share investments over its 20-plus year history - a very high figure. This success mainly stems from the Fund's adherence to value investment and long-term investment principles, experience that is certainly worth carefully studying and learning from.
Further consolidating joint efforts to implement incremental policies. Strongly guiding medium and long-term capital market investment is a systematic project. During the formulation of the Implementation Plan, the Central Financial Office strengthened overall coordination, while the Ministry of Finance, Ministry of Human Resources and Social Security, People's Bank of China, National Financial Regulatory Administration, National Council for Social Security Fund and others worked closely together with us, carrying out work creatively to jointly promote the concrete and powerful policy measures just introduced. This also represents important, long-term institutional reform. In subsequent implementation, we will continue to strengthen communication and collaboration while enhancing tracking and effectiveness.
We believe that under the strong leadership of the Party Central Committee and State Council, and with strong support from all quarters, implementation of this Plan will further enhance medium and long-term capital's equity allocation capabilities, steadily expand investment scale, improve capital market funding supply and structure, and consolidate the market's positive momentum. It will also help medium and long-term capital achieve better long-term investment returns while better practicing the concepts of long-term investment, value investment, and rational investment, creating a virtuous cycle of preserving and increasing the value of medium and long-term capital, maintaining stable and healthy capital market operations, and promoting high-quality development of the real economy.
Yicai Reporter:
We note that the Implementation Plan proposes implementing evaluation cycles of three years or longer for state-owned commercial insurance companies. Could you explain the reasoning behind this decision? How will this requirement be implemented going forward?
Vice Minister of Finance Liao Min:
Implementing long-cycle performance evaluation for state-owned commercial insurance companies is a crucial measure to promote their long-term participation in capital markets.
First, insurance funds are characterized by stable sources, large scale, and long payment cycles, making them typical 'long-term investment capital' and important market participants. Insurance fund investment in capital markets is a common international practice. Looking at our large state-owned commercial insurance companies' operations, there is still room to increase capital market investment.
Second, high-quality capital market development requires participation from medium and long-term investment funds, including more insurance funds, to reduce short-term volatility and enhance long-term resilience. In turn, high-quality capital market development will positively impact the value preservation and growth of medium and long-term funds, including insurance funds.
To support increased insurance fund market participation, the Ministry of Finance has been actively using performance evaluation as a guidance tool. In October 2023, we issued a notice on long-cycle evaluation for state-owned commercial insurance companies, implementing a combined short and long-term assessment approach. The 'return on net assets' indicator was split into 'current year' and 'three-year average' components, each weighted at 50%. This was designed to guide state-owned insurance companies to optimize asset allocation and focus on long-term investment returns.
Moving forward, we will further promote insurance fund market participation and revise the long-cycle evaluation system for state-owned commercial insurance companies according to the Implementation Plan's requirements. Our main considerations are:
Further increasing the weighting of long-cycle evaluation in operational efficiency indicators. The long-cycle component of the 'return on net assets' indicator will be adjusted to no less than 60%, encouraging more medium and long-term capital market investment and better aligning evaluation periods with long-term investment cycles.
Implementing long-cycle evaluation of state-owned capital preservation and appreciation indicators. Through combined short and long-term evaluation, we'll encourage state-owned commercial insurance companies to increase medium and long-term investment, achieving stable growth in owners' equity and state-owned capital preservation and appreciation.
Promoting improved investment management capabilities among state-owned commercial insurance companies. We'll encourage and guide them to strengthen investment management and enhance long-term operational capabilities.
We believe these measures will guide state-owned commercial insurance companies to focus more on stable operations and better conduct long-term, value-oriented investments. This will help insurance funds more effectively serve as market 'stabilizers' and economic 'boosters,' injecting more momentum into the sustainable, healthy development of China's capital markets. Thank you.
Xinhua Reporter:
Since the September 26th Politburo meeting last year called for “steadily advancing mutual fund reform,” could you please explain the progress on both mutual fund reform and increasing the scale and proportion of equity funds?
Wu Qing:
Mutual funds are indeed crucial institutional investors and buy-side forces in the capital market, helping investors share in listed companies' growth through professional investment services while promoting positive interaction between economic development and household wealth growth. In recent years, the mutual fund industry has maintained steady development. Total assets under management grew from 13 trillion yuan in 2019 to 33 trillion yuan by the end of last year. Within this, equity funds grew from 2.3 trillion to 8.2 trillion yuan, with equity ETFs exceeding 3 trillion yuan.
In recent years, due to complex factors, including stock market fluctuations, particularly in the past two years, some equity funds experienced losses. The industry has revealed issues such as misaligned operating philosophies, corporate governance deficiencies, and short-term investment behaviors. Following the September 26th Politburo meeting's directive on steadily advancing mutual fund reform, the CSRC, adhering to a people-centered approach, has thoroughly analyzed these issues and proposed targeted reform measures. Our preliminary reform plan considers:
Improving fund company governance and positioning. This includes strengthening Party leadership over the industry, improving corporate governance, ensuring shareholders, boards, and management fulfill their duties, and firmly establishing investor-centric operating principles. We're systematically reforming industry evaluation systems and strengthening long-cycle performance assessment - aligning with Vice Minister Liao's earlier points about extending evaluation periods. We're enhancing incentive mechanisms and compensation systems to align interests between fund companies, executives, fund managers, and investors, preventing excessive focus on scale over returns. We'll steadily reduce comprehensive fund fees - building on existing reductions in management, custodian, and transaction fees, we'll further reduce sales fees from 2025, potentially saving investors about 45 billion yuan annually.
Strengthening functional roles and vigorously developing equity funds. As mentioned, the Implementation Plan specifies that mutual funds' A-share holdings should grow by at least 10% annually over the next three years. Fund reform will support this target through four approaches:
Launching more products matching investor needs, including low-volatility products and normalizing floating fee structures
Accelerating index investment development with a high-quality development action plan and five-day registration for stock ETFs
Strengthening regulatory classification evaluation guidance, increasing weightings for equity fund scale and long-term performance
Encouraging core research and investment capability improvement through evaluation systems
Strengthening regulatory enforcement and investor protection. We'll improve regulations in key areas like shareholder rights, personnel management, and market exit. We'll strengthen guidance and constraints on fund investment behavior, rectifying excessive speculation like high turnover rates and style drift. We'll increase enforcement against violations, strictly punish illegal activities, strengthen information disclosure supervision, and further cultivate a positive industry culture.
Currently, the CSRC is conducting further research and gathering feedback from industry institutions, investors, and other stakeholders on the reform plan, which we'll refine and implement as soon as possible. Thank you.
The Paper reporter:
We know that insurance funds have long investment horizons and are important institutional investors. I would like to ask what considerations the National Financial Regulatory Administration has regarding guiding insurance funds into the market.
NFRA Vice Chairman Xiao Yuanqi:
Thank you very much for your interest in the insurance industry. In September 2024, the State Council issued the 'Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry,' which I previously interpreted. The Opinions emphasized 'leveraging the long-term investment advantages of insurance funds, cultivating genuine patient capital, and promoting virtuous cycles among funds, capital, and assets.' The NFRA is firmly implementing the central government's decisions, continuously guiding insurance funds to increase stock market investment. Currently, insurance funds' investments in stocks and equity funds exceed 4.4 trillion yuan.
Looking at insurance fund allocation, capital markets and unlisted enterprise equity are primary investment directions. Currently, stocks and equity funds account for 12%, while unlisted enterprise equity investments account for 9%, totaling 21%. This reflects insurance funds' advantages and determination as patient, long-term capital.
Insurance companies still have significant potential and room for increasing stock investments, and increasing stock investment is currently a good strategy and choice for insurance fund asset allocation. We will further optimize insurance fund investment policies and encourage insurance funds to increase their stock market investment ratio steadily. In particular, large state-owned insurance companies should take the lead, with two major objectives: striving to invest 30% of new premiums in the stock market annually and working to steadily increase the proportion of stock market investment from current levels. These 'two objectives' will fully leverage insurance funds' role as institutional investors in long-term, value-oriented investment.
CMG Reporter:
The Implementation Plan proposes to optimize the capital market investment ecosystem continuously. What are the specific measures in this regard?
Wu Qing:
Thank you for the question. Building a market ecosystem where investment and financing develop in coordination, and where market participants fulfill their responsibilities and receive appropriate returns, has always been the CSRC's goal. Since last year, we've been implementing the new 'Nine Measures,' focusing on strengthening fundamentals and strict supervision, respecting market laws and rules, enhancing basic market systems, and improving comprehensive regulatory frameworks. We've established a '1+N' policy system to continuously improve the market ecosystem. Moving forward, we'll use the Implementation Plan as an opportunity to further enhance policies promoting long-term, value-oriented, and rational investment.
On the asset side, we're focusing on improving listed company quality and investment value. Last year, we issued guidelines on market value management and policies encouraging dividends and buybacks. Listed companies distributed 2.4 trillion yuan in dividends and conducted 147.6 billion yuan in buybacks - both historical highs. Following the 'Nine Measures' requirement for multiple annual dividends including pre-Spring Festival distributions, many companies have already implemented multiple dividend payments this year. About 90% of profitable listed companies have distributed dividends. In the two months before this Spring Festival (December and January), over 310 companies are expected to distribute pre-festival dividends totaling about 340 billion yuan - 9 times the number of companies and 7.6 times the amount compared to last year. The CSI 300 dividend yield has reached 3%, significantly higher than the 10-year government bond yield, highlighting equity market investment value. We'll continue improving market entry and exit standards, increasing high-quality listings, and supporting more benchmark high-tech companies to list on the A-share market.
On the trading side, we're enriching products and tools suitable for medium and long-term investment. We're allowing institutional investors like mutual funds, commercial insurance funds, basic pension funds, annuity funds, and bank wealth management to participate more actively as strategic investors in private placements. We're providing equal policy treatment for insurance asset management and bank wealth management products as mutual funds in IPO subscriptions, private placements, and stake-building standards.
On the institutional side, we're promoting professional service capabilities. We support securities and fund institutions in conducting market-based mergers and acquisitions to build first-class investment banks and institutions. Since last year, several leading institutions have made substantial progress in M&A. We'll guide industry institutions to increase resources in human capital, research, trading, and capital to better serve long-term funds and all investors.
On the enforcement side, we're firmly maintaining market fairness, justice, and openness. We're implementing strict regulatory requirements, combining punishment, prevention, and governance. We're targeting both early-stage violations and major offenses, particularly pursuing those who harm investor interests. We're improving investor protection mechanisms, especially for small investors, and strengthening constraints on controlling shareholders and actual controllers.
In conclusion, building a good capital market ecosystem is a common expectation of all market participants. The CSRC will persist in its efforts to improve the market ecosystem, making it attractive for various types of capital to invest and develop. Thank you.
China Securities Journal Reporter:
The National Social Security Fund (NSSF) is a strategic reserve fund that is very significant for addressing population aging. What specific plans are in place to optimize investment assessment policies for the NSSF going forward?
Liao Min:
First, regarding the NSSF's positioning. As you mentioned, the NSSF is our country's social security reserve fund. Its basic investment principle is to preserve and increase value while ensuring asset safety and liquidity.
Second, regarding investment allocation methods. Following international pension fund practices, the fund uses a combined stocks and bonds investment structure. Appropriate stock market investment helps expand value appreciation channels and increases allocation flexibility. Current policies set clear upper limits for stock investments while ensuring maintenance of reasonable levels. Currently, the NSSF maintains roughly a 40-60 stock-bond ratio, which has proven reasonable with stable returns since inception.
Third, regarding the relationship between NSSF and capital markets. The capital market, including both bonds and stocks, can be mutually beneficial with the NSSF. As a major market investor, the NSSF's long-term, stable investment strategy helps promote healthy market operation while enhancing the fund's returns, creating a virtuous cycle proven by past performance.
Fourth, regarding central fiscal support to strengthen the NSSF. The Ministry of Finance, as the fund's management department, will continue supplementing the NSSF while supporting increased capital market investment with more flexible stock portfolio strategies, aiming for a win-win situation of fund value preservation and market stability.
Moving forward, the Ministry of Finance will implement the Implementation Plan with two key focuses:
Optimizing NSSF investment management systems. We've revised domestic investment management measures and sought public feedback. The Ministry is currently reviewing this feedback. The revised measures will optimize investment ratios for different instruments and increase investment strength and flexibility.
Improving the long-cycle assessment system for NSSF operations. We're developing a refined evaluation system for periods over 5 years, assessing investment operations across risk management and value preservation dimensions. This will balance short-term returns with long-term objectives, reinforcing long-cycle investment principles to support stable, healthy capital market development.
Economic Daily Reporter:
Promoting the market entry of social security funds and other medium to long-term funds is an important aspect of developing pension finance. What specific measures will the Ministry of Human Resources and Social Security take in this regard?
Vice Minister Li Zhong, Ministry of Human Resources and Social Security:
As you mentioned, promoting the market entry of social security funds and other medium to long-term funds is indeed crucial for developing pension finance. Vice Minister Liao has just discussed the supervision of the National Social Security Fund. The Ministry of Human Resources and Social Security, together with relevant departments, is actively working to improve investment policies and regulatory systems for the National Social Security Fund, basic pension insurance funds, and enterprise (occupational) pension funds. We aim to expand market-oriented investment operations, standardize investment management, and steadily increase fund value preservation and appreciation. This will both strengthen the self-sustaining capacity of the pension insurance system and provide important medium to long-term capital support for healthy capital market development.
In promoting market-oriented investment operations of social security funds, safety remains our primary consideration. Moving forward, while ensuring fund safety, we will follow principles of standardization, prudence, professionalism, and market-oriented operation. We will focus more on medium and long-term returns, improve long-cycle assessment mechanisms, continue to enhance investment policies for the National Social Security Fund, basic pension insurance funds, and enterprise pension funds, strengthen investment supervision systems, and promote stable investment returns. Through scientifically sound asset allocation and prudent investment strategies, we aim to achieve value preservation and appreciation of social security funds.
Securities Daily Reporter:
Last year, the Central Bank established two capital market support tools, and the market has been paying close attention to their implementation. A few days ago, the People's Bank of China held a joint symposium with the Securities Regulatory Commission. What is the latest progress on this work?
PBOC Committee Member Zou Lan:
Since 2024, the People's Bank of China has implemented multiple measures to create favorable liquidity conditions in financial markets. We've utilized various monetary policy tools including reserve requirement ratios, rediscounting, and open market operations, and innovatively launched longer-term outright reverse repos to meet banking system liquidity needs. Last year, we made our largest adjustments in recent years, reducing the reserve requirement ratio twice by a total of 1 percentage point and cutting central bank policy rates twice by a total of 0.3 percentage points. These policy measures have played a crucial role in maintaining stable financial market operations.
To support capital market stability, we innovatively established two tools: the swap facility for securities, fund, and insurance companies and the stock buyback and increased holdings lending facility. Following market-oriented and law-based principles, these tools aim to enhance listed companies' and institutional investors' financing and investment capabilities, supporting their role in market value management and maintaining market stability while strengthening the capital market's internal stability. As Chairman Wu Qing mentioned, we will explore making these arrangements routine. Currently, both tools are progressing smoothly and playing important roles in maintaining market stability and boosting market confidence.
The swap facility for securities, funds, and insurance companies has been implemented twice, totaling 105 billion yuan. The 50 billion yuan operation in October last year was fully utilized to finance increased stock holdings. The 55 billion yuan operation in January this year is now available for institutions to use at any time to finance increased stock holdings. With multi-faceted policy support, securities companies have significantly increased their proprietary stock investments. After several months of adjustment, the operational processes have become completely smooth, and we expect both business scale and response speed to improve substantially under the Implementation Plan.
The stock buyback and increased holdings lending facility has also been widely welcomed by the market. To enhance these tools' stabilizing effect, the PBOC has continuously optimized policy arrangements, particularly regarding core elements like loan ratios and terms. We've reduced the required proportion of own funds from 30% to 10%, extended the maximum loan term from 1 to 3 years, and encouraged banks to issue credit loans, facilitating lending operations to fully meet listed companies' financing needs for market value management. In recent discussions between the PBOC and CSRC, financial institutions noted that companies actively managing their market value are typically high-quality enterprises with strong performance and management confidence. They expect this lending facility to become a new growth point for banking business. Financial institutions will leverage their customer base and network advantages to provide comprehensive financial services to listed companies and major shareholders. To date, financial institutions have reached cooperation intentions with nearly 800 listed companies and major shareholders, with over 300 companies publicly disclosing plans to apply for stock buyback and increased holdings loans, with an upper limit exceeding 60 billion yuan. Companies with market value above 10 billion yuan account for over 40%, and loans are priced preferentially, averaging around 2%.
Going forward, the PBOC will work with relevant departments to continuously optimize policies based on experience, enhance tool usability, and expand coverage at appropriate times, ensuring relevant enterprises and institutions can access sufficient medium and long-term funds for increased investment as needed.
China Banking and Insurance News Reporter:
Earlier, the National Financial Regulatory Administration (NFRA) promoted pilot reforms for long-term insurance fund investments. What is the progress on this, and what are the next steps being considered? Additionally, investors are very concerned about the real estate market situation. What is the progress of the urban real estate financing coordination mechanism?
Vice Chairman of NFRA Xiao Yuanqi:
Thank you for your questions. Let me address them one by one. Regarding the pilot reform of long-term insurance fund investments: In October 2023, the NFRA approved China Life and New China Life Insurance to establish securities investment funds through insurance capital, with a scale of 50 billion yuan for long-term stock market investment. Over the past year, these funds have operated smoothly, achieving a dynamic balance between profitability, safety, and liquidity. We understand the funds have achieved considerable returns and maintain a positive outlook on stock market investment value. Other insurance companies are actively applying to participate in this pilot program. After researching the first batch of pilots, we found them very necessary and will provide full support. The second batch will be more flexible mechanically - funds can be established by a single insurance company or jointly by two or more companies. We're planning a scale of 100 billion yuan for the second batch, with 50 billion to be approved before Spring Festival for immediate stock market investment. We'll gradually expand the number of participating insurance companies and fund sizes based on their willingness and needs.
Regarding your second question about the real estate financing coordination mechanism established in early 2024, the results have been quite significant. Let me share some data: By the end of last year, commercial banks' loans to "whitelist" real estate projects reached 5.03 trillion yuan, exceeding the original target of 4 trillion yuan. As of January 22nd, an additional 570 billion yuan has been added, bringing the total to 5.6 trillion yuan. The "whitelist" mechanism has provided sufficient and stable funding for real estate project completion and delivery. Under this mechanism, we established the principle of "include all eligible projects, lend to all qualified projects, and act as early as possible." This means all real estate projects meeting the "5+5" standard conditions should be included in the "whitelist" management. Once projects are listed, banks establish green channels for active financing support. Banks are also allowed to advance all loans to supervised project accounts, ensuring projects can start early and continue without interruption. To date, this mechanism has supported the construction and delivery of 14 million housing units. Recently, the real estate market has shown positive changes, and this mechanism has played a crucial role in protecting homebuyers' legal rights, stabilizing the market, and promoting healthy development.
Going forward, we will continue to leverage this mechanism to guide financial institutions in maintaining stable real estate sector financing, utilizing various financing tools' unique advantages to create synergistic effects and improve precision, timeliness, and effectiveness. We will also actively explore and summarize the experience and good practices of the "whitelist" mechanism to optimize related real estate financing systems quickly, adapting to and promoting high-quality development in the real estate sector.
Phoenix TV reporter:
Foreign capital is an important source of medium and long-term funding. What arrangements are planned for the next phase to attract and facilitate foreign investment in the A-share market?
Wu Qing:
Thank you for your question. Opening up to the outside world is China's long-standing basic national policy and a distinctive feature of Chinese modernization. In recent years, the CSRC has firmly implemented the nation's overall financial opening arrangements, continuously improving foreign investment policies in the capital market and promoting two-way opening of markets, products, and institutions.
We have consistently relaxed qualification requirements for qualified foreign investors and expanded their investment scope. We've optimized the overseas listing filing system, improved domestic-overseas listing coordination mechanisms, systematically expanded capital market cross-border connectivity, and promoted A-shares' inclusion in major international indices like MSCI, FTSE Russell, and S&P Dow Jones. We've supported more foreign financial institutions to conduct business in China, with 26 foreign-controlled or wholly foreign-owned securities companies, fund companies, and futures companies receiving approval. Overall, the convenience and stability of foreign investment in A-shares continue to improve, creating a positive ecosystem for foreign participation.
Regarding foreign investment in A-shares, by the end of last year, 866 QFIIs had obtained investment qualifications, and foreign investors held about 3 trillion yuan in A-shares through QFII and Stock Connect programs. Foreign capital has become one of the important funding sources for the A-share market. A significant portion consists of medium and long-term funds, including many well-known global sovereign funds, pension funds, mutual funds, and commercial insurance funds, which have actively participated in the A-share market for many years and contributed to market stability.
I want to emphasize that the CSRC remains committed to market-oriented, law-based, and internationalized reform, maintaining unity between reform and opening up, creating a favorable investment environment for international investors, and supporting various foreign entities in A-share market participation. The door to capital market opening will only continue to widen.
In the next phase, we will firmly implement the spirit of the Third Plenary Session of the 20th CPC Central Committee and the Central Financial Work Conference, particularly the series of arrangements for steadily expanding financial sector opening. We will further optimize the qualified foreign investor system and improve capital market connectivity mechanisms, enrich cross-border investment and risk management product offerings, strengthen communication with international investors and address their concerns and reasonable demands, and enhance regulatory capabilities under market opening conditions to maintain stable market operations.
China's economic prospects are bright, and the capital market has enormous development potential. We welcome more foreign investment in the A-share market to participate in and share the opportunities of China's economic and capital market reform and development. Thank you!