Compiled by Caijing  

(Caijing.com.cn) The National Council for Social Security Fund has ordered its managers to start investing in local government bonds as well as medium-term notes, the official Shanghai Securities News reported.

Funding from China’s national pension system further expands participation in the local government bond program, after insurers were encouraged to take up the bonds last month.

In March, the central government authorized local governments to issue bonds for the first time to help finance infrastructure programs intended to revive China’s economy. The local governments have a quota of 200 billion yuan, part of a 950 billion deficit spending program for 2009.

Analysts have said that the 3-year bonds are unattractive to insurers because of the short duration and low rates of 1.6 to 1.8 percent in the first issues, almost the same as treasury bonds. 

China’s national pension fund, managed 562.5 billion yuan in assets at the end of 2008. It booked investment returns of 5.3 percent last year.