Low ROE could hurt China's funding of its huge pensions deficit

China''s listed companies suffer from low ROE. Unless it improves, the country''s shift from a pay-as-you-go system to a funded system could be compromised.

China has a problem. It has massive pension liabilities, estimated at $800 billion, and listed state owned enterprises which show dismal return on equity. The interim results of Chinese listed companies showed ROE of just 4.1% this year, down from 5% at the same point last year, according to research from emerging markets investment bank CLSA.

To provide for our liabilities, we would typically look at an investment ...

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