(Yicai Global) Feb. 26 -- A key figure in China's financial sector yesterday lamented the dearth of risk consciousness in China's society overall and called on the government to strictly oversee the financial industry, online media outlet The Paper reported.

The big problem at present is financial risk and the lack of risk awareness in general society is a big problem, Lou Jiwei, chairman of the National Council for Social Security Fund, noted in a speech to the annual meeting of the Chinese Economists 50 Forum 2018 yesterday in Beijing.

Lou formerly served as minister of finance from 2013 to 2016 and chairman of Chinese government investment arm China Investment Corp. from 2007 to 2013.

Lou was also concerned about financial risks when he served at the ministry of finance, he but did not pay too much attention then, he said in the speech. "And now that I am back in the investment community, I see all the risks."

Lou found during his dialog with foreign investment institutions that, though China is gradually liberalizing some of its financial sectors, some foreign investors are still unwilling to enter. "They see only risks, while Chinese see only opportunities."

Lou cited the example of how some limited partners (GPs) manage dozens of funds, a prohibited practice in foreign countries that is normal in China.

Fund managers with so many portfolios can sell their previous flops to later issued funds in a kind of Ponzi investment, Lou noted.

"The entire society is blind to risk," Lou believes, adding that it is very difficult to change this situation and that it requires stricter regulation.

The biggest market peril is policy risk as it is the most unpredictable, and thus a sustained regulatory approach is required, or the possibility of a shift from current high leverage and relatively high financial risk to systemic risk is very great.

The National Council for Social Security Fund manages more than CNY2 trillion (USD318 billion) in assets and is also entrusted with investment management. It manages and invests CNY430 billion in pensions in nine provinces.