US Sens. Jeanne Shaheen, a New Hampshire Democrat, and Marco Rubio, a Florida Republican, are calling on the head of the Federal Retirement Thrift Investment Board (FRTIB) to reverse an investment decision they say will help fund the Chinese government using the retirement savings of federal employees.
The two senators sent a letter to FRTIB Chairman Michael Kennedy, saying the “short sighted” decision to mirror the MSCI All Country World ex-US Investable Market Index “will expose nearly $50 billion in retirement assets of federal government employees, including members of the US Armed Forces, to severe and undisclosed material risks associated with many of the Chinese companies listed on this MSCI index.”
They said the decision to track the index, which is expected to be implemented next year, “constitutes a decision to invest in China-based companies, including many firms that are involved in the Chinese Government’s military, espionage, human rights abuses, and ‘Made in China 2025’ industrial policy.”
According to the senators, the index or its sub-indexes have included AviChina Industry & Technology Ltd., whose subsidiaries develop aircraft, unmanned aerial vehicles, missiles, and other weapons systems for the Chinese military. They noted that AVIC is a state-owned entity that the US Trade Representative has called “the sole domestic supplier of military aircraft” to the Chinese army.
“It is well-known that the Chinese government uses state-owned and state-directed enterprises to control production, compete in global markets, and serve the Chinese Communist Party’s military, political, and economic goals,” said Shaheen and Rubio in their letter. “Many of these Chinese companies may soon receive investments directly from the paychecks of members of the US Armed Services and other federal government employees because of your decision.”
In addition to the military-related aspect of the investment, they also said the decision would invest federal employees’ retirement savings in companies that are guilty of human rights violations. They cited Hangzhou Hikvision Digital Technology (Hikvision), a state-run technology firm that’s on the index. They said the company has tens of thousands of surveillance cameras throughout the Xinjiang Uighur Autonomous Region that “support the Chinese government’s detainment of over 1 million Uighur Muslims and other ethnic and religious minorities.”
According to the senators, constituent entities of Hikvision’s controlling shareholder, the China Electronics Technology Group Corp., were added to the US Commerce Department’s Entity List last year for “acting contrary to the national security or foreign policy interests of the United States.”
Additionally, they noted that National Defense Authorization Act for Fiscal Year 2019 prohibits the US federal government from procuring equipment from Hikvision, and ZTE Corp., which they said also has been in the index or its sub-indexes, and will ban federal contracts with companies using Hikvision’s equipment or services beginning in August 2020.
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