China lifted limits on industries in which the country’s insurers can make equity investments and laid plans to allow insurance funds to tap private equity and venture capital investments in pilot programs, the State Council said Wednesday, reported Caixin.
The rule changes may unleash trillions of RMB of insurance money into the economy as the government moves to fuel China’s rebound from the effects of the coronavirus pandemic.
Chinese insurers had total assets of nearly RMB 22 trillion ($3.1 trillion) as of the end of May, according to China Banking and Insurance Regulatory Commission (CBIRC) data. They had RMB 19.7 trillion of outstanding investments, including RMB 6.8 trillion in bonds, RMB 2.8 trillion in bank deposits and RMB 2.6 trillion in stocks and securities. The remaining funds are in long-term equity and debt investment plans.
The decision, disclosed after a cabinet meeting chaired by Premier Li Keqiang, formalized long-awaited rule changes to expand insurers’ equity investment activities to provide additional long-term funding to the private sector. It paves the way for the implementation of a pending 2018 revision by the CBIRC to rules governing insurance companies’ equity investments.