China has given its state pension fund access to domestic stock for the first time ever, according to Chinese news agency Xinhua.
Local governments will now be able to invest as much as 30 per cent of their pension funds into shares listed on China's indices. Combined, the funds have assets worth around ¥2trn (£205bn), which means they could invest as much as ¥600bn (£62bn) in total.
Rules published by the State Council's website say money from the funds can be invested in China's stocks, equity funds and balanced funds. It is hoped that by increasing demand, prices will be pushed up.
On Friday last week, the Shanghai Composite Index closed four per cent slower following the release of disappointing manufacturing data for the country. Over the last month, factory output shrank at its fastest pace since 2009, adding to concern among investors that the country is entering a period of log-term economic decline.
Second quarter figures for the year showed how China's economy grew by just seven per cent over the three-month period, which was slower than any time global financial crisis.
The Shanghai Composite Index finished the week 12 per cent lower overall, which had knock-on effects for global markets. Across the US and Europe, there were major stock declines, including on the FTSE 100, which suffered nine consecutive days of losses.
In another attempt to hinder slowdown in the world's second largest economy, China's central bank devalued the yuan last month.