Social security funds investment into venture capital discussed

The 11th China Venture Capital Investment Forum was held in Shenzhen over the weekend. Participants discussed the possibility of allowing social security funds to enter the venture capital investment area.

Vice chairman of the Standing Committee of the National People's Congress, Chen Changzhi, suggests allowing wealth security funds to invest in the venture capital market. His view was echoed by many participants.

Gu Shengzu, member of standing committee, NPC, said, "The entry of social security funds is important. The US venture capital market is driven by pension funds."

China's social security funds have been allowed to invest 5 percent of capital into the stock market. This besides buying bonds and other stable products. The Chairman of China's national security fund said earlier this year that the fund plans to invest in private equity. Industry insiders say that's a step closer to the venture capital field.

Shu Xiaowu, deputy GM of Fortune Venture Capital, said, "The pension fund usually has longer term for investment. If we allocate one part of the fund to invest in the venture capital market, dividing into different institutions and different products, I think the risk is not that high."

But some experts warn that social security funds should be cautious with investment, because of their special function. Last year, the funds suffered from stock market volatility and lost 6.75 percent of its value.