China’s locally managed government funds decide to cross paths with the country’s stock exchange.

There is global concern that the world second largest economy may be due for an economic slowdown via either a “soft” or “hand” landing. China’s economy grew at a sluggish pace in the fourth quarter of 2011. At year’s end, the nation’s GDP expanded by 8.9%, a seemingly high figure compared to U.S. growth but a 9.1% fall from China’s previous quarter.

Not surprisingly, the Shanghai Stock Exchange has also been suffering, losing a “quarter of its value in the past 9 months and is trading 62% below its 2007 peak,” according to Reuters.

It’s no surprise that global investors have been long-interested in China. Yet, regulatory restrictions put in place by a stringent government mired in a closed, communist past has kept the country’s potential largely untapped for many, but China’s recent weakened economy may further a more open investment policy.

Locally managed government entities and pension funds will soon be permitted to allocate their assets to the Shanghai exchange and trade as shares—up to an alleged 20%, or $57 billion, according to some sources. Amounts will vary according each fund. The largest government entity, the National Social Security Fund, with approximately, $146.5 billion in assets, will also participate.

Currently, Chinese pensions can only invest in government bonds and bank deposits, many of which are low-yield as the global economy is held at a standstill.

Apart from boosting its exchange, China’s move to make pension investments trade-friendly is also an attempt to answer the nation’s increasing dilemma to cover a growing aging population, not unlike pensions in the U.S. that are struggling to stay funded.

A representative neither from the National Social Security Fund nor from the Shanghai Stock Exchange could be reached to comment for this story.