Key Points
- Xinhua Insurance (新华保险) has been approved for the third batch of China’s long-term insurance fund investment pilot program, aiming to co-launch the third phase of the Honghu Fund (鸿鵠基金).
- The pilot program encourages eligible insurance institutions to establish new private securities investment funds and private equity investment funds to mobilize “patient capital” and support **technology finance**.
- The first two batches of the pilot totaled ¥162 billion RMB ($22.5 billion USD), with the second batch introducing expanded institutions and structural innovations like the contractual fund model (契约型基金模式).
- Recent approvals, including Honghu Fund (鸿鹄基金) Phase II (¥20 billion RMB) and Sunshine Insurance’s (阳光保险) Yangguang Heyuan fund (¥20 billion RMB), significantly contribute to the pilot.
- With the additional ¥60 billion RMB ($8.33 billion USD) from the third batch, the total scale of the long-term stock investment pilot is anticipated to reach ¥222 billion RMB ($30.83 billion USD).
The long-term insurance fund investment reform pilot program in China is seriously picking up steam, signaling a potential surge of fresh capital into the markets.
Here’s the latest scoop: the National Financial Regulatory Administration (国家金融监督管理总局) just gave the green light to Xinhua Insurance (Xinhua Baoxian 新华保险) to jump into the third batch of this game-changing pilot.
This is big news for anyone watching Chinese tech and investment trends.
Xinhua’s Honghu Fund: Gearing Up for Phase Three
So, what’s Xinhua Insurance (Xinhua Baoxian 新华保险) planning?
They’re looking to co-launch the third phase of the Honghu Fund (Honghu Jijin 鸿鹄基金) with other institutions.
The official nod came through on May 13th.
This isn’t their first rodeo; with this approval, Xinhua Insurance (Xinhua Baoxian 新华保险) has now successfully rolled out three phases of the Honghu Fund (Honghu Jijin 鸿鹄基金).
And they’re not alone.
Word on the street is that multiple insurance players, including China Post Life Insurance Asset Management (Zhongyou Baoxian Zichan 中邮保险资产), are actively gunning for a spot in this third phase.
So far, China Life Asset Management (Guoshou Zichan 国寿资产) and Xinhua Insurance (Xinhua Baoxian 新华保险) are the confirmed participants.
Industry insiders also let slip that Honghu Fund (Honghu Jijin 鸿鹄基金) Phase II is prepping for market entry soon.
Its focus? High-quality listed companies that boast:
- Large market capitalization
- Good liquidity
- Significant market influence
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The Big Idea: Cultivating “Patient Capital”
Why all this buzz about long-term insurance funds?
Chen Hui (陈辉), Director of the China Actuarial Science and Technology Lab at the Central University of Finance and Economics (Zhōngyāng Cáijīng Dàxué Zhōngguó Jīngsuàn Kējì Shíyànshì 中央财经大学中国精算科技实验室), breaks it down.
He says supporting eligible insurance institutions to set up these new private securities investment funds is all about two things:
- Exploring new models for how insurance funds are used.
- Guiding insurance funds to become “patient capital” – think long-term, steady investment.
“The investment philosophy here is all about asset selection, diversified investment, and long-termism,” Chen Hui (陈辉) explains.
“It’s about using that long-term view to navigate uncertainty.”
He also pointed out that private securities investment funds have developed some pretty effective global asset allocation strategies over time, like:
- The Merrill Lynch Investment Clock Asset Allocation Strategy (Meilin Shizhong Zichan Peizhi Celüe 美林时钟资产配置策略)
- The Yale Endowment Asset Allocation Strategy (Yale Jijin Zichan Peizhi Celüe 耶鲁基金资产配置策略)
- The Bridgewater Associates Asset Allocation Strategy (Qiaoshui Jijin Zichan Peizhi Celüe 桥水基金资产配置策略)
These aren’t just fancy names; they represent sophisticated ways to manage and grow large pools of capital.
Fueling Innovation and Tech Finance
“Looking at these asset allocation strategies, they’re beneficial for promoting capital market innovation and beefing up the market’s value discovery function,” Chen Hui (陈辉) added.
These elements are crucial for the healthy development of China’s current capital market.
Plus, the National Financial Regulatory Administration (国家金融监督管理总局) is also backing insurance institutions to establish new private equity investment funds.
The goal here is to steer insurance funds towards boosting technology finance.
This aims to create a positive technology-industry-finance (Keji-Chanye-Jinrong 科技—产业—金融) cycle, leveraging financial muscle to support technological breakthroughs.
This could be a massive tailwind for startups and tech companies in China.
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The Journey So Far: A Look Back at the Pilot Program
This whole long-term insurance fund investment pilot kicked off in 2023.
Fast forward to October 2023:
The National Financial Regulatory Administration (国家金融监督管理总局) approved China Life Insurance (Zhongguo Renshou 中国人寿) and Xinhua Insurance (Xinhua Baoxian 新华保险) for the first pilot.
They were tasked with setting up securities investment funds by raising insurance funds, with a hefty scale of ¥50 billion RMB ($6.94 billion USD), all aimed at long-term stock market investment.
By March 2024, Honghu Zhiyuan (Shanghai) Private Securities Investment Fund Management Co., Ltd. (Honghu Zhiyuan (Shanghai) Simu Zhengquan Touzi Jijin Guanli Youxian Gongsi 鸿鹄志远（上海）私募证券投资基金有限公司) – the entity established by China Life Insurance (Zhongguo Renshou 中国人寿) and Xinhua Insurance (Xinhua Baoxian 新华保险), and often just called “Honghu Fund” – was officially up and running, making investments.
As of early March 2025, Honghu Fund (Honghu Jijin 鸿鵠基金) Phase I was successfully out the door.
Its primary targets were strategic emerging industries, including:
- New energy (Xinnengyuan 新能源)
- Biomedicine (Shengwu Yiyao 生物医药)
- High-end equipment manufacturing (Gaoduan Zhuangbei Zhizao 高端装备制造)
The performance? Strong, with risks reportedly below benchmark and returns exceeding it.
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- First Batch (2023): China Life Insurance, Xinhua Insurance (Focus: Securities Investment Funds)
- Second Batch (2024): China Life Insurance, Xinhua Insurance, CPIC Life Insurance, Taikang Life Insurance, Sunshine Life Insurance, PICC Life Insurance, Ping An Life Insurance, Taiping Life Insurance (Expansion: Added 6 institutions, introduced Contractual Fund Model)
- Third Batch (2024): Xinhua Insurance, China Life Asset Management, China Post Life Insurance Asset Management (expected) (Focus: Private Securities and Equity Investment Funds)
Second Batch: Stepping Up Innovation and Participation
The success of the first phase meant the second batch of the pilot moved forward quickly.
This round brought in some cool mechanism innovations and expanded the roster of participating institutions.
Institutional Innovation Highlights:
- Besides the limited partnership fund model (Youxian Hehuo Xing Jijin Moshi 有限合伙型基金模式), insurance institutions can now also set up private securities investment funds using a contractual fund model (Qiyue Xing Jijin Moshi 契约型基金模式).
- Limited Partnership Model nutshell: Involves general partners (GP) managing the fund and bearing unlimited liability, and limited partners (LP) providing capital with liability limited to their investment.
- Contractual Fund Model nutshell: Investors entrust funds to a fund manager (trustee), with rights and obligations set out in a trust contract signed with a custodial bank (Tuoguan Yinhang 托管银行).
Expansion of Institutions:
While China Life Insurance (Zhongguo Renshou 中国人寿) and Xinhua Insurance (Xinhua Baoxian 新华保险) continued from the first batch, the second batch welcomed six new insurance giants:
- CPIC Life Insurance (Taibao Shou Xian 太保寿险)
- Taikang Life Insurance (Taikang Renshou 泰康人寿)
- Sunshine Life Insurance (Yangguang Renshou 阳光人寿)
- PICC Life Insurance (Renbao Shou Xian 人保寿险)
- Ping An Life Insurance (Ping An Renshou 平安人寿)
- Taiping Life Insurance (Taiping Renshou 太平人寿)
Recent Moves: More Billions Pouring In
The momentum is undeniable.
On March 5th of this year, the National Financial Regulatory Administration (国家金融监督管理总局) officially approved Honghu Fund (Honghu Jijin 鸿鹄基金) Phase II.
Shortly after, at the end of April, Honghu Fund II was established with a scale of ¥20 billion RMB ($2.78 billion USD).
Xinhua Insurance (Xinhua Baoxian 新华保险) and China Life Insurance (Zhongguo Renshou 中国人寿) are each planning to chip in ¥10 billion RMB ($1.39 billion USD) to subscribe for fund units.
Then, in mid-April, Taikang Wenxing Private Fund Management Co., Ltd. (Taikang Wenxing Simu Jijin Guanli Youxian Gongsi 泰康稳行私募基金管理有限公司), initiated by Taikang Asset Management (Taikang Zichan 泰康资产), got its approval.
The expected initial investment scale for this one? A cool ¥12 billion RMB ($1.67 billion USD).
And there’s more.
On May 16th, Sunshine Insurance (Yangguang Baoxian 阳光保险) announced a big move.
Their board greenlit its subsidiary, Sunshine Asset Management (Yangguang Zichan Guanli 阳光资管), to set up the Yangguang Heyuan Private Securities Investment Fund (Yangguang Heyuan Simu Zhengquan Touzi Jijin 阳光和远私募证券投资基金) as the fund manager.
The total scale for this fund is a substantial ¥20 billion RMB ($2.78 billion USD), which Sunshine Life Insurance (Yangguang Renshou 阳光人寿) plans to fully subscribe for.
What will Yangguang Heyuan invest in?
- Equity assets (Quanyi Lei Zichan 权益类资产)
- Fixed income assets (Guding Shouyi Lei Zichan 固定收益类资产)
- Cash management tools (Xianjin Guanli Lei Gongju 现金管理类工具)
Specifically for equity assets, they’ll be eyeing constituents of the CSI 300 Index (Hushen 300 Zhishu 沪深300指数), the Hang Seng Hong Kong Stock Connect Index (Hengsheng Ganggu Tong Zhishu 恒生港股通指数) constituents, and related index ETFs and index tracking funds.
The Grand Total: Over ¥200 Billion RMB and Counting
Let’s put this all into perspective.
So far, the National Financial Regulatory Administration (国家金融监督管理总局) has approved two batches of the long-term insurance fund investment reform pilot, totaling an impressive ¥162 billion RMB ($22.5 billion USD).
The second batch alone accounted for ¥112 billion RMB ($15.56 billion USD) of that.
Now, add in the recently approved ¥60 billion RMB ($8.33 billion USD) from the third batch (which Xinhua’s participation contributes to).
This brings the total anticipated scale of the long-term stock investment pilot to a whopping ¥222 billion RMB ($30.83 billion USD)!
This continued expansion of the long-term insurance fund investment pilot highlights a significant strategic push to channel more stable, long-horizon capital into China’s markets, potentially boosting innovation and growth across key sectors.
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