Beijing's decision to sell off its stake in state-owned enterprises despite vehement reaction from the stock market illustrates how difficult it is to use this avenue to raise sorely needed funds. For years, there have been numerous alternative ideas to raise funds for the Social Security Fund. Instead of selling off the Ministry of Finance's stake in state-owned enterprises, the Government could have raised taxes, issued bonds or set up another lottery. But there are advantages to selling off the state's shares the other options do not offer. Bonds are an option but the Social Security Fund needs huge amounts of money now. The process of issuing bonds for such a big sum, over several years, would mean slowing the fund's flow. By comparison, selling off the state's shares provides an immediate source of funds. Raising taxes is another way to generate income for the Social Security Fund but there would undoubtedly be an uproar from domestic companies if the already-high 33 per cent levy went higher. In recent years, China has had greater success in increasing tax revenues by lowering taxes. When taxes are too high businesses come up with creative ways to avoid paying. Besides, selling off the state's holdings gives minority shareholders a greater say. 'A shareholder-managed business is entirely different from an enterprise that is managed by the central government,' points out ING Pension Trust chief executive officer David Hatton. 'Nothing really changes if a company becomes publicly listed but the government owns all the shares.' Mainland stock market indices rose more than 1 per cent yesterday despite Premier Zhu Rongji's saying the Government would continue to sell shares. The gains were largely helped by National Social Security Fund chairman Liu Zhongli's comments that China would allow 40 per cent of the 61 billion yuan (about HK$57.17 billion) fund to invest in the stock market and so increase its liquidity.