Congress Eyes Barring Federal Pension Investments in China

An independent government body had been preparing to invest in a global index that has 7.5% Chinese stocks.

A bipartisan push, headed by GOP Sen. Marco Rubio of Florida, has introduced a bill to stop a federal retirement fund from investing in Chinese equities.

The lawmakers are worried that using the retirement money to fund Chinese companies will undermine US economic and national security. They also dislike the companies’ failure to meet financial rules that are standard in today’s developed markets.

CNBC reported last month that the Trump administration was weighing a similar move. And the White House may go as far as blocking all American financial investments in Chinese companies. Similarly, the US Department of Treasury proposed new regulations that aim to curtail national security risks brought about by foreign investments made into the US.  

The Rubio-led legislation would halt a plan currently in motion by the Federal Retirement Thrift Investment Board, an independent government body overseeing the federal retirement plan, to invest in the MSCI All Country World ex-U.S. Investable Market Index.  That index is composed of 7.5% Chinese stocks. The federal retirement program, called the Thrift Savings Plan, offers 401(k)-like accounts to civilian federal workers and military members.

Rubio asserted the United States should not fund the Chinese government’s ambitions, especially its desire to supplant the US as the world’s top economic power.  “America’s investors should never be a source of wealth funding Beijing’s rise at the expense of our nation’s future prosperity,” he said.

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