BEIJING (Reuters) - China's insurance firms face possible risks from "irrational" stock investments and large-scale overseas mergers and acquisitions, the state-run People's Daily on Sunday quoted a top regulatory official as saying.

In a shift away from low-yielding corporate bonds, Chinese insurers, led by privately owned Anbang Insurance Group and Ping An Insurance Group <601318.SS>, have snapped up real estate, bank and other insurance company stakes at home and overseas.

Insurance firms will be encouraged to make long-term investments and better serve the real economy, the paper quoted Chen Wenhui, vice chairman of the China Insurance Regulatory Commission, as telling a meeting of officials.

"2017 may be a very difficult year for the use of insurance funds," Chen said, adding that authorities would tackle "hidden dangers" in the industry, while companies needed to "maintain a high degree of vigilance" over risks.


Chen cited "regulatory arbitrage" activities as a problem, in addition to the "irrational" stake bidding and large-scale cross-border activities, the paper added.

(Reporting by Kevin Yao and Hou Xiangming; Editing by Clarence Fernandez)

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