China has introduced a new initiative aimed at revitalizing its struggling stock market. This initiative focuses on promoting substantial investments from state insurers and commercial insurance funds into the A-share market.

This plan, developed by six financial regulators, requires major state-owned insurance companies to increase both the volume and proportion of their investments in domestic stocks and equity funds. To ensure long-term stability, a performance evaluation system will be established for state-owned insurers, where:

• Annual return on equity will contribute no more than 30% to the assessment.
• At least 60% will be based on a longer performance cycle of three to five years.

This initiative is a response to concerns over potential tariffs from the U.S. on Chinese goods, which have created a challenging economic environment. As 2025 begins, significant losses in Chinese stocks have prompted this action. Additionally, the initiative aims to boost the investment activities of China’s National Social Security Fund and pension funds in the stock market. Mutual fund managers will also be encouraged to gradually increase both the size and proportion of equity funds they manage.

Furthermore, this announcement is part of a wider array of measures by Chinese authorities to restore investor confidence and rejuvenate capital markets. Recent swap and relending schemes totaling 800 billion yuan for stock purchases are included in these efforts.

📎 Related coverage from: yahoo.com