WASHINGTON – American public pension funds have invested more than $68 billion in China – enemy No. 1 US – since 2020, worries financial experts who warn of national security risks in a new report obtained by The Post.
The bipartisan nonprofit Future Union found that 56 of the 74 largest American pension plans have put money into the Chinese market over the past 36 months — a period in which relations between Beijing and Washington have been strained.
“In the past 12 months, only 24 investments have been made, which should be recognized as support for China’s technological progress,” the report said.
“Our research shows four of the largest US public pensions have invested in China in the last few months,” he added.
American public pension funds have invested more than $68 billion in China since 2020. AP
Investment
In total, the new report said, various US public pension funds have more than $73.28 billion wrapped up in Chinese stocks.
Among the largest funds investing in Chinese companies are the New York State Common Retirement Fund — more than $8.3 billion — and the New York State Teachers Retirement System, which has commitments of $3.1 billion.
Other leading public pension funds investing in China are California Public Employees Retirement System ($7.86 billion); California State Teacher System ($5.55 billion); Washington State Investment Board ($5.02 billion); San Francisco Employees Retirement System ($3.3 billion); and the Pennsylvania Public School Employees Retirement System ($3.2 billion), according to the report.
Dozens of American public school systems and university endowment funds have also invested more than $7.6 billion in Chinese companies.
Topping the list are the University of Michigan ($1.56 billion); Texas public school funds ($1.97 billion) and the University of Texas System ($1.6 billion); as well as the University of California Board of Regents ($1.55 billion).
Among the largest funds investing in Chinese companies is the New York State Teachers Retirement System. Google Maps
“The threat posed by China to America’s national security is clear yet managers of our retiree pensions and university endowments continue to feign ignorance and question accountability, undermining America’s national interests,” Future Union executive director Andrew King told The Post. “That must end now.”
Private university endowments are also guilty of questionable investments, but the totals are unclear because they don’t have the same reporting requirements as public institutions, King said.
For example, the group found that Columbia University, Harvard University and the University of Chicago have invested an unknown amount in China.
Still, Future Union tracked enough information to determine that Princeton has at least $155 million invested in Chinese funds, followed by Stanford (at least $80 million), Yale (at least $50 million); Massachusetts Institute of Technology (at least $22 million); Duke (at least $20 million); and Carnegie Mellon (at least $10 million).
“The report is effectively an indictment of existing pension and endowment leaders who, until now, have taken the path of least resistance in maintaining choice rather than showing true leadership and doing what is right rather than what is easy,” King said.
Data showing public pension fund investment in China. Union of the Future
‘It just needs to stop’
While the investment data is alarming, King said he is not alleging any illegal activity, adding that many institutions “may not know” that their funds are being invested in the Chinese market.
“Not every fund is a villain, and this report highlights pension, endowment and nonprofit funds that are leading the way on this issue,” King said. “Others should follow their lead and take meaningful action.”
King also said Future Union did not want to accuse money managers of “deliberately favoring China over the US,” but explained that investing in Chinese stocks is tempting since Beijing tightly controls its markets and can artificially inflate returns.
“They make investments in start-ups that compete with us and countries that are democratically aligned with fraudulent systems where [CCP] members are basically putting their thumbs on the scale of who wins, and so obviously the returns are better,” he said.
States invest pensioners’ money in China and Hong Kong. Union of the Future
“The truth is [investors] run a portfolio, they want diversification and frankly, if the returns are good in China, they will invest to try it,” he added.
But, he said, that behavior “has just stopped,” given the threat such investments pose to the US government and American innovation and industry.
In a statement last week, former Pentagon chief technology officer Christine Michienzi called China a “major threat to US national security and the economy” – and said investment in its market only increases that threat.
“Efforts that assist China in developing its economy help erode US capabilities and give China an advantage in any potential military engagement,” he said. “Identifying these investors is a critical step in preventing this type of aid and preventing China from continuing its quest for dominance.”
Aside from making a political mistake, King said US investors in China consider the “non-zero risk” that Beijing could freeze funds given the current geopolitical tensions.
Future Union plans to present its findings to Congress after House Speaker Mike Johnson issued a proposal to curb Pentagon investment in China. Michael Brochstein/SOPA Images/Shutterstock
“Because the whole system is rigged in China, there may be days where they don’t let you get your money,” he said. “It doesn’t encompass any of the models that make these asset management firms work.”
Future Union, which works to “magnify the impact of the private sector and capitalism in preparation for global conflict,” plans to present its findings to Congress after House Speaker Mike Johnson (R-La.) released a bipartisan proposal to curb Pentagon investment in Chinese technology from the 2024 National Defense Authorization bill, which passed last week.
“The removal of legislation that would have restricted capital to China through the NDAA effectively bypasses Congress until next year and for the foreseeable future,” lamented King. “It also proves the uncomfortable truth that America’s elected leaders need help.”
“What we hope is to be a catalyst to get some representatives back to the Hill to discuss this issue,” he added.
Such initiatives may have a chance in the new year, as Chairman of the Special Select Committee on Chinese Communist Party Representatives Mike Gallagher (R-Wis.) told The Post that “Congress must act so that public pension dollars do not fuel the CCP’s economic, ideological and military aggression.”
“Under no circumstances,” he added, “should American workers’ retirement accounts fund the Chinese Communist Party, support forced labor or build weapons that could one day be used against us on the battlefield.”
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Source: thtrangdai.edu.vn/en/
