Tuesday, December 10, 2024
HomeSTRIKING BACK AGAINST CHINA´S AGGRESSIONSome US states are removing Chinese corporations from their investments

Some US states are removing Chinese corporations from their investments

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In his capacity as state treasurer, Vivek Malek advocated for the withdrawal of Chinese company investments from Missouri’s primary retirement system, placing the state among the first in the country to do so. Now that he is running for reelection in a Republican primary on August 6 against opponents who are also criticizing financial ties to China, Malek is highlighting the divestment from China.
A fresh angle on the hostility to China, which many candidates this year have painted as the biggest threat to the United States, is brought to light by the Missouri treasurer’s campaign. Additionally, Florida and Indiana have prohibited their public pension funds from making investments in specific Chinese firms. Arizona vetoed similar legislation, and similar bills were filed in Illinois and Oklahoma that targeted public investments in foreign rivals.

After the United States, China has the second-largest economy in the world.
According to an estimate by Future Union, a nonprofit organization that promotes democracy and is managed by venture capitalist Andrew King, between 2018 and 2022, U.S. public pension and university endowments made around $146 billion in investments in China. According to the research, at least one public pension fund in each of the more than four-fifths of US states has investments in China and Hong Kong.
King, who claims that China has stolen intellectual property from American businesses to produce identical goods at lower rates than the market, stated, “Frankly, there should be shame — more shame than there is — for continuing to have those investments at this point in time.”

“You’re talking about a significant sum of money that, to be honest, is competing with the innovation and technology ecosystem in the United States,” King remarked.
The National Association of State Retirement Administrators argues against state-mandated divestitures, arguing that federal government alone should have the authority to impose such actions against particular corporations on the grounds of U.S. security or humanitarian concerns.

A new law that would forbid American investors from supporting artificial intelligence systems in China that might be used for military purposes, like weapon targeting, has been suggested by the U.S. Treasury Department. Declaring it a “national security risk,” President Joe Biden barred a bitcoin mining company with Chinese backing from owning land close to a nuclear missile station in Wyoming in May.
States have, however, before prohibited specific investments. Apartheid forced many states, towns, and colleges to withdraw from South Africa before the US Congress finally intervened.
Recently, a few states declared their intention to divest from Russia due to the ongoing conflict with Ukraine. But for certain administrators of public pension funds, that has proven to be challenging.
According to Clark Packard, a research fellow for trade policy studies at the libertarian Cato Institute, state pension divestment plans are “part of a broader march toward more confrontation between China and the United States.”But “having to deal with a scattershot policy at the state level makes it more challenging for the federal government to manage the overall relationship.”
The state of Indiana was the first to pass legislation last year mandating a phased withdrawal of investments from specific Chinese companies by the public pension system. About $1.2 billion of the system’s assets were in Chinese companies as of March 31, 2023, of which $486 million were subject to the divestment requirement. After a year, the Indiana Public Retirement System reported that its investment exposure in China had decreased to $314 million, with only $700,000 remaining vulnerable to divestiture.
In November of last year, Missouri State Employees’ Retirement System trustee Malek made an attempt to persuade fellow trustees to remove their investments in Chinese firms.After failing, he retried in December and was successful in getting approval for a plan that called for divesting over a full year. When The Associated Press repeatedly inquired about the status of the divestment, representatives of the retirement system remained silent.
In recent weeks, Malek has made a point of bringing up the Chinese divestment in his campaign advertisements. He claims that fentanyl coming from China “is drugging our kids” and makes a promise that “they won’t get money from us as long as I’m treasurer.” Not a single dime.
Divestment from China is a stance that is shared by state senator Andrew Koenig and state representative Cody Smith, two of Malek’s primary rivals in the Republican primary.

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