Senators Rebuke Federal Pension’s Criticisms of China Investment Ban

Sponsors of the bill says the pension board must either be ‘unaware’ or ‘purposefully misleading.’

The back-and-forth between US senators looking to ban Federal Retirement Thrift Investment Board (FRTIB) investments in indices with China-listed shares continues, with the senators now asserting the board’s criticisms of their ban bill as potentially ignorant or purposefully misleading.

The issue started when several senators introduced legislation that would pause the FRTIB’s plan to invest in the MSCI All World Country World ex-U.S. Investable Market, composed of 7.5% Chinese stocks, citing national security concerns correlated with strengthening the Chinese Communist Party.

Subsequently, the FRTIB said the bill “discriminated against 5.8 million employees, retirees, and service members by restricting their ability to direct their money and save for their retirement,” and limiting the board from offering international investments to their participant’s holdings.

“Not only is the FRTIB analysis of the bipartisan TSP Act deeply flawed, the Board’s claim that there is no international index available that meets the bill’s criteria is categorically false,” Sen. Marco Rubio’s spokesman, Nick Iacovella, said in a statement to Reuters. Rubio is one of the bill’s sponsors.

The bill would only stop the FRTIB from investing in China A-Shares, Iacovella said.

“Either the Board is concerningly unaware of the many international indices that do not include China A-Shares, or they are being purposefully misleading,” Iacovella said,

Sen. Jeanne Shaheen, another primary sponsor of the bill, did not respond to calls by press time.

FRTIB asserted its point following the senators’ rebuke, saying that there’s no reason to disallow the board from investing in the same index that’s used by many of the country’s top private and public institutions.

“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 a previous statement to FRTIB Chairman Michael Kennedy.

“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.”

Prior to the bill, CNBC reported that the Trump administration was looking to do something similar, potentially going so far as to blocking all American financial investments in Chinese companies.

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