An advocacy group is urging President Donald Trump to cancel anticipated investments from the federal Thrift Savings Plan (TSP) into the MSCI All-Country World Index, which would indirectly fund Chinese state-owned companies, the organization alleges.
The MSCI index has 6% of its portfolio invested in the stocks of corporations based in China, according to a statement from the Committee on the Present Danger: China. The Federal Retirement Thrift Investment Board voted to “mirror” this particular MSCI index starting next year.
The group finds this action unacceptable due to national security concerns connected with funding state-owned Chinese companies linked to the country’s Communist Party.
By funding such companies, the committee argues, the investments are “enabling Beijing to: violate US sanctions; illegally build and militarily fortify islands in the South China Sea; monitor, incarcerate, and repress its own and other nations’ religious minorities and ordinary citizens; engage in surveillance state practices, digital totalitarianism and “social credit” scoring; conduct cyberattacks and intellectual property theft; and construct advanced weapon systems with which to inflict murderous damage on this country and its men and women in uniform.”
Bipartisan legislation was recently introduced that would prohibit the TSP from following through with the MSCI Index investment. “America’s investors should never be a source of wealth funding Beijing’s rise at the expense of our nation’s future prosperity,” Senator Marco Rubio, a Florida Republican, one of the sponsors of the legislation, said in a statement.
“It is totally unacceptable for our veterans and those serving in uniform today to invest in Chinese companies building weapons designed to kill them or their comrades-in-arms,” the group said.
Critics of such opinion argue that across-the-board portfolio limits on investing in Chinese firms will harm the US.
“I would be much more comfortable with the US blocking the Thrift board from investing in particular entities that may be complicit in a human rights violation or that has stolen technology rather than saying the Thrift board can’t invest in China,” said Derek Scissors, a China expert at the American Enterprise Institute (AEI), the governing body of one of the biggest federal worker retirement programs. “The US government shouldn’t be involved in across-the-board bans.”
According to Bloomberg, the Trump administration wants to force stock indices to drop firms that the administration considers a material risk to US investors.