Guo Shuqing, the recently appointed chairman of China Securities Regulatory Commission, has in the past three months repeatedly urged social security funds to invest in the stock market.

"It is hard to preserve or increase the value of these funds without stock and bond markets after reviewing the experiences of developed countries, such as the United States and Japan," Guo said last week.

Zheng Bingwen, head of the Global Pension Fund Research Center of the Chinese Academy of Social Sciences, applauded the proposal of the watchdog's chairman.

"The sooner social security funds are put into the securities market, the less value depreciation we will have," Zheng said.

However, the previous big fluctuations in China's share prices and the recent grim situation, as well as the immature regulation system, sparked economists' worries about the safety of the large funds.

The main reason for the dim stock performance is not because of the shortage of funds, but is related to the unreasonable capital market mechanism and the lack of investor education, said Wu Xiaoqiu, director of the Financial and Securities Institute at Beijing-based Renmin University of China.

Contrasting with the bitter experience most ordinary share investors had, 277 companies went public in 2011 and raked in huge sums, raising 256.4 billion yuan, according to Wind Information, a Chinese financial information provider.

The government's encouraging policies boosted a large group of new listed companies in recent years, making China the world's largest IPO market since 2007. This magic "capital pool" was creating millionaires every month thanks to the extremely high IPO prices, while most private players lost their money in speculative investments.

"The Chinese stock market should shift its key role from raising money for companies to adding value for investors," Wu said.

To inspire investors, the outspoken watchdog chief Guo, a graduate of the University of Oxford, has outlined the direction of his reforms many times since he took office on Oct 30.

He required newly listed companies to specify dividend distribution rules in the share prospectus and urged regulators to improve the IPO verification system - though share prices have not immediately reacted to his blueprint.

More regulatory measures to protect investors' interests await discussion during the two sessions, including the reforms for the IPO issuing system, dividends distribution method and delisting procedure, said Wang Jun, a senior economist with China Center for International Economic Exchanges, a government think tank.

"The regulatory agency should look for solutions to the root of the problem," Wang said. "Market-oriented reform needs to be accelerated."