The Chinese Government is working on a plan to transfer some shares in listed State-owned enterprises (SOEs) to the national pension fund, part of an effort to boost the fund and improve the management of SOEs.

The State-owned Assets Supervision and Administration Commission (SASAC), which oversees the assets of central SOEs on behalf of the central government, is in talks with the Ministry of Finance and the China Securities Regulatory Commission (CSRC) about the plan, said SASAC official Su Guifeng.

"But the proportion of shares to go to the national pension fund has not been decided yet," added Su.

But insiders said that the proportion would not be high, amid concerns that the State may lose its controlling stake in these firms if the pension fund sold the shares at a later date.

According to the Financial Times, SASAC will allocate 10 per cent of any domestic share issue by SOEs to the pension fund.

This will come as a much-needed injection of assets to China's national pension fund, as the nation comes to terms with an increasingly ageing society.

Meanwhile, it is hoped that the move will also improve the market discipline of SOE managers, because the pension fund would in theory be more concerned about share price performance than other government bodies.

The government proposed a similar transfer of assets to the pension fund in 2001, but the plan was dropped after the stock market fell sharply amid fears that it would result in a flood of new shares onto the market.

But Standard Chartered researcher Jason Chang insisted that the stock market could cope with this sort of injection of assets.

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