The project, which aims to transform the State-owned insurer into a shareholding company, will allow foreign investors to hold stakes in PICC, under the condition that the State remains the majority holder, PICC General Manager Tang Yunxiang said on Monday at a press conference in Beijing.

Earlier, China Life Insurance Company, the country's largest State-owned life insurer, also announced a shareholding reform scheme, which allows for heavy involvement of foreign investors.

PICC's Tang said the central government has issued general guidelines for the reform of the State insurance company, under which the company would restructure itself into a financial holding group and invite shareholders to acquire stakes in the company.

Prior to this, the central government had also been pondering the feasibility of another plan, which would encourage foreign investors to acquire stakes in the State insurer's branch companies.

Tang said the targeted foreign holders for PICC do not necessarily have to be insurance companies, but they must be financially strong, enjoy an international reputation, and have a background in finance.

He said the final plan will be completed after the upcoming Central Financial Work Conference in February, which is expected to give more specific guidelines on State-owned financial enterprises' shareholding reforms.

Tang stressed that the reforms must be done in accordance with international practices and with the help of global intermediary institutions.

At the moment, PICC is planning to set up a huge reform office to analyze the actual situation of the company.

With a history of over 50 years, PICC has accumulated over 50 billion yuan (US$6 billion) in assets and established an operational network with 5,000 branch outlets.

"We have not carefully calculated our assets and holdings accumulated over the past 50 years," said Fu Zhu, a director with PICC's research and development centre. Fu was invited to work for PICC after he successfully helped the Minsheng Bank of China get listed in 2000.

"And we must make everything as clear and specific as possible for the convenience of foreign investors," Fu said.

Tang said he expects to complete the shareholding project in two to three years, by which time PICC will have made great strides towards capital assets adequacy and modern management and operation.

At present, the capital assets of PICC are no more than 10 billion yuan (US$1.2 billion), which is very small considering the huge projects they have underwritten.

Tang said it was impossible to amplify the capital base with only State injection of funds. Introducing foreign shareholders should provide the answer to this problem.

As for the foreign holders, Tang said they can benefit from PICC's established brandname, extensive business network and familiarity with local business patterns.

(China Daily January 22, 2002)