Leading Trump administration officials on May 11 moved to block further investment by U.S. federal retirement funds into Chinese equities that “present significant national security and humanitarian concerns,” reported FOX Business.
National Economic Council Chair Larry Kudlow and national security adviser Robert O’Brien addressed a letter to U.S. Labor Secretary Eugene Scalia on May 11 detailing the Trump administration’s wishes.
The letter obtained by FOX Business outlined the Trump administration’s objections to the Thrift Savings Plan (TSP)—the federal government’s retirement savings fund—investing in Chinese companies. According to the news outlet, the funds total some $4 billion in assets.
The letter stated, “Departing from the [Federal Retirement Thrift Investment] Board’s established index for the International Stock Investment Fund (I Fund) to track one that maintains Chinese equities is risky and unjustified.”
Kudlow and O’Brien in their letter made reference to the Chinese regime’s handling of the CCP (Chinese Communist Party) virus pandemic, commonly known as the novel coronavirus pandemic.
The investment of TSP funds in Chinese companies “would expose the retirement funds to significant and unnecessary economic risk,” the letter stated.
The move would “channel federal employees’ money to companies that present significant national security and humanitarian concerns because they operate in violation of U.S. sanction laws and assist the Chinese Government’s [CCP] efforts to build its military and oppress religious minorities,” Kudlow and O’Brien said.
The TSP was set to transfer some $50 billion of its international fund to track an index that includes some China-based stocks of companies currently under scrutiny in Washington.
Among the Chinese companies in the index that have drawn the ire of some in Washington is surveillance firm Hangzhou Hikvision Digital Technology, which was placed on a trade blacklist last year because its technology is used in detention camps for China’s Uyghur minorities.
The fund would also invest in telecoms equipment company ZTE, which was penalized by the U.S. government for violating American sanctions, as well as aircraft and avionics company Aviation Industry Corporation of China, which provides weapons for the Chinese military.
Kudlow and O’Brien said that the Federal Retirement Thrift Investment Board (FRTIB), which oversees the fund, is set to implement these plans “during a time of mounting uncertainty concerning China’s relations with the rest of the world.”
This includes “the possibility that future sanctions will result from the culpable actions of the Chinese Government with respect to the global spread of the COVID-19 pandemic.”
“In view of these considerations, we do not believe that proceeding with the investment of the retirement savings of hardworking federal workers in Chinese companies is prudent,” Kudlow and O’Brien note.
In a separate letter obtained by FOX Business, Labor Secretary Scalia later ordered Michael Kennedy, the chairman of the FRTIB, to “halt all steps” related to the investing of the TSP in Chinese equities, “at the direction of President Trump.”
Kudlow and O’Brien have “grave concerns with the planned investment on grounds of both investment risk and national security,” Scalia told Kennedy in his letter, asking that the FRTIB respond by close of business on Wednesday.
Reuters contributed to this report.