AMP Capital and China’s biggest insurer China Life will establish a new funds management company in China with the hope of handling some of the $800 billion on offer.

AMP will hold a 15 per cent stake in the new China Life AMP Asset Management Company, with the balance to be held by China Life Asset Management Company, a subsidiary of China Life Insurance Company.

China Life is China’s largest insurance group, institutional investor and corporate pension manager.

“Total assets under management in China’s mutual fund industry is expected to reach $0.8 trillion in 2013 growing at 15 per cent per annum to reach almost $1.5 trillion in 2017,” AMP said in a statement on Monday.

The deal will be China Life’s first joint venture in mainland China with a foreign partner in funds management.

Recent regulatory changes in China mean insurance companies can establish funds management companies offering public funds to retail and institutional investors.

The joint venture is subject to regulatory approval by the China Securities Regulatory Commission.

AMP chief executive Craig Dunn said the deal would give the company direct access to the world’s second largest and fastest growing major economy.

“The funds management joint venture represents the commercialisation of our memorandum of understanding with China Life and is the ideal balance of our mutual strengths and capabilities,” Mr Dunn said.

The joint venture means AMP Capital now has an institutional and retail presence in Australia, China and Japan.

AMP shares dropped five cents, or 1.05 per cent, to $4.69.