The country's pension funds are lagging behind their Asian peers for sustainable returns, leading to calls for Beijing to let them invest in more alternative assets.
As Beijing seeks to expand its pension system it will need to find ways to simplify how the system is managed, instead of maintaining the set of watchdogs that currently have a say.
China’s former central bank governor Zhou Xiaochuan has spoken in favour of letting pension funds invest overseas, a sign senior officials are considering such a move.
If the state pension fund is empowered to push for better ESG standards by local companies, it could help turbo-fuel China's apparent ambitions as an environmentally conscious nation.
After a two-year trial run, the ambitious scheme is being extended nationwide. Investment restrictions and built-in home bias, though, could undermine its effectiveness.
China’s national pension fund will play a greater role in helping local governments grow their pension assets. This should also benefit external asset managers.