How to achieve a win-win situation from ＂reduction＂ to ＂transfer＂ of state-owned capital into social security？

　　"Enriching the social security fund with state-owned capital" has reached a new level.

　　On November 18th, the State Council issued the Implementation Plan for Transferring Part of State-owned Capital to Enrich the Social Security Fund (hereinafter referred to as the "Plan"), which included the central and local state-owned and state-controlled large and medium-sized enterprises and financial institutions in the transfer scope, and the transfer ratio was unified to 10% of the state-owned shares of enterprises, so as to make up for the gap of China’s basic old-age insurance fund through equity dividends.

　　The transfer of state-owned shares of central enterprises, entrusted by the State Council Social Security Fund will be responsible for centralized holding; The transferred state-owned shares of local enterprises shall be centrally held, managed and operated by wholly state-owned companies established by provincial people’s governments. The transferred state-owned shares may also be entrusted to the special account management of companies with state-owned capital investment and operation functions in this province (autonomous regions and municipalities).

　　The Third Plenary Session of the 18th CPC Central Committee and the Fifth Plenary Session of the 18th CPC Central Committee have clearly stated that "some state-owned capital should be transferred to enrich the social security fund". The report of the 19th National Congress of the Communist Party of China further puts forward requirements for strengthening the construction of social security system. The issuance of this plan made people hear the sound of boots landing.

　　On the one hand, the aging of the population and the gap in pension funds that need to be filled, and on the other hand, the state-owned enterprises that are on the road of deepening reform. What impact will the transfer of state-owned capital into the social security fund and other stakeholders (hereinafter referred to as "stakeholders") have? Can it accelerate the process of mixed reform of state-owned enterprises and inject more vitality into state-owned enterprises?

　　From "reduction" to "transfer"

　　This is not the first time that the government has used the power of state-owned capital to contribute to the social security fund.

　　As early as 2001, the State Council issued the Interim Measures for the Administration of Reducing State-owned Shares to Raise Social Security Funds, which stipulated that all state-owned joint stock limited companies (including companies listed overseas) should sell state-owned shares at 10% of the financing amount and turn them over to the social security fund when issuing and issuing additional shares to public investors for the first time.

　　Eight years later, the Ministry of Finance, together with the State-owned Assets Supervision and Administration Commission, the China Securities Regulatory Commission and the Social Security Fund, issued the Implementation Measures for Transferring Some State-owned Shares in the Domestic Securities Market to Enrich the National Social Security Fund, which stipulated that when a state-owned joint stock limited company went public for the first time, it would transfer 10% of the shares actually issued, and the shares would be held by the National Social Security Fund Council.

　　The transfer, the Ministry of Finance said, is to transfer some state-owned capital to enrich the social security fund, mainly for the equity of central and local enterprise groups, and generally does not involve listed companies.

　　From "reduction" to "transfer" and from "listed company" to "group company", experts think that the meaning is very different.

　　"For the transfer of listed companies, there is a question of whether the board of directors and the shareholders’ meeting agree or not, whether it is ‘ Voting by hand ’ Or ‘ Vote with your feet ’ Will trigger a strong reaction from the capital market. " Qi Yudong, a professor at the School of Economics and Business Administration of Beijing Normal University, believes that the effect of the transfer of group equity is quite different. "There is no question of whether other shareholders agree or not to allocate 10% of state-owned capital to the social security fund through administrative means."

　　This way of transferring state-owned capital shares is simpler, more direct and immediate to experts. Zheng Bingwen, director of the World Social Security Research Center of China Academy of Social Sciences, believes that the scope and volume of this transfer have greatly increased compared with the past.

　　According to the annual report (2016) issued by the Social Security Fund of the National Social Security Fund Council, the total assets of the social security fund were 2,042.328 billion yuan at the end of 2016. "If all the state-owned capital involved is transferred, the income of the social security fund is enough to exceed 10 trillion yuan." Zheng Bingwen estimated that "it can not only reduce the financial burden, but also help the stability of the system."

　　The purpose and use of this share transfer is more directional than in the past. According to the Proposal, the basic goal of equity transfer is to make up for the gap in the basic endowment insurance fund for enterprise employees.

　　The "deemed payment period" refers to the pension rights and interests formed by employees of state-owned enterprises and institutions under the original unit security system before the implementation of the reform of the basic old-age insurance system. Because the original unit security system has not accumulated contributions, the "transitional pension" generated by the "deemed payment period" is equivalent to the "pension debt" embedded in the basic old-age insurance system from the outside, forming a gap in the basic old-age insurance fund.

　　Some scholars have suggested that the gap caused by this historical reason should not be made up by raising the payment rate or transferring it to the next generation, but we can consider using the power of state-owned capital to make up the gap.

　　"It is a proper meaning for state-owned capital to be taken from the people and used by the people." Li Jin, a researcher at the Research Center for the Reform and Development of State-owned Enterprises of Renmin University of China, believes that from the current situation, pension funds in some areas have a large deficit, which has been filled by finance and is unsustainable in the long run. Transferring state-owned capital into social security can also let the whole people enjoy the fruits of the development of state-owned enterprises.

　　According to the Proposal, the the State Council entrusts the Social Security Fund to be responsible for centralized holding, separate accounting, assessment and supervision of the transferred state-owned shares of central enterprises. When conditions are ripe, with approval, the Social Security Fund can set up a pension management company to independently operate the transferred state-owned shares of central enterprises.

　　The transferred state-owned shares of local enterprises shall be centrally held, managed and operated by wholly state-owned companies established by provincial people’s governments. The transferred state-owned shares can also be entrusted to the special account management of companies with state-owned capital investment and operation functions in this province (autonomous regions and municipalities).

　　The data shows that the average annual investment return rate of the National Social Security Fund since its establishment is 8.37%, and the accumulated investment income is 822.731 billion yuan. Dong Keyong, secretary-general of the 50-member Forum on China’s Pension Finance and former dean of the School of Public Administration of China Renmin University, believes that the national social security fund is stable and suitable as the undertaker in terms of annualized rate of return.

　　In fact, before the implementation of the national plan, Shandong Province has become the first region to "eat crabs".

　　In 2015, Shandong Province issued the Plan of Enriching Social Security Fund by Transferring State-owned Capital of Provincial Enterprises, which requires 30% of the state-owned capital of 471 provincial state-owned enterprises (including state-owned capital in state-owned shareholding enterprises) to be transferred to enrich the provincial social security fund. And it is held by the Provincial Social Security Fund Council through one-time transfer.

　　Zheng Bingwen believes that Shandong’s pioneering efforts give a good reference to all localities, and the transfer of local state-owned assets greatly reduces the pressure on local finance and helps to make up for the current gap of pension funds.

　　Enterprises with strong competition are suitable for priority transfer.

　　For the progress of equity transfer, a two-step plan is given in the Plan.

　　The first step is to select some central enterprises and some provinces to carry out pilot projects this year, including 3-5 central enterprises and 2 central financial institutions. The second step is to transfer the state-owned shares of other qualified central management enterprises, enterprises run by central administrative institutions and central financial institutions in batches in 2018 and beyond on the basis of summing up the pilot experience. The people’s governments of all provinces (autonomous regions and municipalities) are responsible for organizing and implementing the transfer of state-owned shares of local state-owned enterprises.

　　At present, the benefits of central enterprises and local state-owned enterprises have improved significantly. In the first three quarters of this year, central enterprises realized a total operating income of 19.1 trillion yuan, the best level in the same period in the past five years. From January to October, the economy of state-owned enterprises operated steadily and made progress, and their income and profits continued to grow rapidly.

　　According to Zhu Boshan, an expert on state-owned assets and general manager of Shanghai Tianqiang Management Consulting Co., Ltd., in the past, social security funds could obtain liquidity income through equity transfer of listed companies, but this time, through equity transfer of central enterprises and local state-owned enterprise groups, social security funds relied more on dividends during the three-year lock-up period. "Therefore, the corporate benefits of the transfer are particularly important."

　　Zhu Boshan believes that although the timetable is given in the "Proposal", from the perspective of efficiency, some enterprises with good benefits but monopoly nature are suitable for equity transfer earlier. Gao Minghua, director of the Research Center for Corporate Governance and Enterprise Development of Beijing Normal University, believes that the more competitive the enterprise, the more suitable it is to give priority to the transfer of equity. "Fully competitive industries that do not involve the national economy, people’s livelihood and national security can be transferred first, but industries with scarce resources like oil are not suitable for premature liberalization, otherwise it is easy to pursue profits excessively, resulting in over-exploitation of scarce resources."

　　The number of central enterprises is small, and the corporate governance structure is relatively clear. In comparison, many "zombie enterprises" exist in local state-owned enterprises, and they are being gradually cleaned up in the reform of state-owned enterprises. In Dong Keyong’s view, this is a gradual process. Therefore, the speed of local state-owned enterprises in the process of equity transfer will be slower than that of central enterprises. "There will be different ways in different places, which need to be adapted to local conditions. This transfer method is conducive to improving the governance level of state-owned enterprises."

　　Qi Yudong believes that the transfer of equity at the level of group companies can realize the diversification of property rights of the parent company. From the perspective of state-owned enterprise reform, property rights reform is an improvement. Zhu Boshan also believes that before the mixed reform of state-owned enterprises, it was more at the level of subsidiaries of central enterprises. In the future, social security funds will enter group companies to improve the monopoly situation, which will also help the implementation of mixed reform at the parent company level.

　　"The property right structure determines the governance structure, which in turn determines the company’s performance and value improvement." Qi Yudong pointed out that for a long time, a monopoly easily led to a monopoly, which in turn led to a monopoly. Starting from the reform of property rights, we can import new financial investors into state-owned companies.

　　Institutional investment enterprises such as pension funds have precedents abroad. Qi Yudong told China Youth Daily and Zhongqing Online reporter that in foreign countries, funds belong to new strategic investors, which can improve the property right structure of enterprises in the process of investing in enterprises, and then improve the corporate governance structure.

　　"But strategic investors and financial investors are different." Qi Yudong pointed out that from the current "Program", the government temporarily defined the social security fund as a financial investor. According to the Proposal, social security funds and wholly state-owned companies in various provinces (autonomous regions and municipalities), as financial investors, enjoy the right of income and disposal of state-owned shares, do not interfere in the daily production and operation management of enterprises, and generally do not send directors to enterprises. When necessary, directors may be sent to the enterprise upon approval.

　　In Zhu Boshan’s view, the scope of the enterprises transferred this time is very large, and the number is too large. It is really difficult for the undertaker to send people to each enterprise. However, when the enterprise loses money or has problems in its development strategy, it can consider sending people to the board of directors.

　　Qi Yudong believes that the current shareholding ratio of the undertaker is low, and it is not feasible to participate in corporate governance. If after the restructuring of the group company, the equity becomes highly diversified, and the undertaking entity holds 10% equity, which is not a small proportion, its status as a financial investor should be transformed into a strategic investor, "to further participate in and improve the corporate governance level."

　　In Gao Minghua’s view, according to the current regulations, the proportion of transferring 10% equity into the social security fund is not high, and it is difficult to form checks and balances on major shareholders. "In addition to the social security fund Council and other stakeholders, it is necessary to introduce more social capital to make the equity more diversified." He pointed out that joining the board of directors is only a direct way to participate in the operation of enterprises. Even if no one is sent to the board of directors, according to the provisions of the Company Law, the undertaker as a shareholder can also participate in decision-making, supervise and question the board of directors.

　　Does diversification of property rights mean that the level of corporate governance can be improved? In Gao Minghua’s view, it depends on whether institutional investors can play an active role. "Foreign institutional investors will evaluate the corporate governance level of their investments and publicly release relevant information, thus prompting enterprises to improve their corporate governance level."

　　He believes that if an institutional investor is only a passive investor, it will have little effect on improving the level of corporate governance. In the future, the social security fund will hold a large number of shares, and the National Social Security Fund Council needs to expand the team and attract corporate governance professionals. "The government should have some supporting programs, and the undertaker should not be a passive participant."

　　New problems may arise in the process of transfer.

　　After the promulgation of the "Program", some experts believe that there are still many practical problems that cannot be avoided in the process of future equity transfer, which need further explanation from the government.

　　Zheng Chunrong, deputy dean of the Institute of Public Policy and Governance of Shanghai University of Finance and Economics, pointed out that the object of participation in the transfer was listed companies, which was more adequate in information disclosure. "This transfer is all state-owned capital. After the equity transfer, because these companies are not listed, there are certain challenges in the disclosure and supervision of business management information. "

　　Zheng Chunrong is worried that some local governments may be lucky in the future transfer process. "In order to avoid the transfer of equity, it may be deliberately said that some enterprises are public welfare enterprises and will not be transferred." Although the state has made basic provisions on the nature of commercial state-owned enterprises and public welfare state-owned enterprises, Zheng Chunrong believes that the identification of the nature of enterprises needs to be explained in more detail.

　　"There is another problem, that is, the transfer ratio is unified to 10% of the state-owned equity of the enterprise." Zheng Chunrong pointed out that the number of state-owned enterprises and retirees varies greatly from province to province, and there are also great differences in the stock equity of state-owned assets. There may be many retired old workers in some provinces, and the total equity of state-owned enterprises is limited, so there are great differences between provinces.

　　In Zheng Bingwen’s view, due to the great differences in the operation of state-owned assets in different places, the transfer of local state-owned capital may be uneven. "There will be differences in the transfer strength, results and time in different provinces." He pointed out that areas with relatively large state-owned assets happen to be areas where the phenomenon of aging population is more prominent. These areas will face two pressures. On the one hand, the current capital flow pressure of pension funds is relatively high, and the gap must be made up by transfer; On the other hand, the state-owned economy in these areas has problems of low efficiency and low income.

　　"This is a contradiction." Zheng Bingwen believes that this will test whether the local government regards the transfer as a burden or an opportunity. "In some areas, local fiscal revenue will be under greater pressure, and there may be a wait-and-see attitude towards the transfer. However, after the transfer, it will actually help improve the operational efficiency of state-owned enterprises, improve the transparency of enterprises, and improve the governance structure of the state-owned economy, which may lead to a win-win situation. " In his view, we can let the provinces with better state-owned economy move first and give other provinces a reference.