Despite escalating political tensions, US pension funds are pouring billions into China, raising concerns about national security and potentially undermining Washington’s efforts to curb Beijing’s influence. A recent report by Future Union, an advocacy group, revealed that public pension funds hold over $73 billion in Chinese stocks, with over $68 billion invested in the past three years alone.
California and New York lead the charge, with CalPERS and CaIPERS holding significant stakes in Chinese companies. Notably, these investments continue despite rising security fears due to China’s crackdown on technology firms and its assertive behavior in the South China Sea.
Threat to National Security
Expressing concern about the investment, Future Union executive director Andrew King told New York Post, “The threat posed by China to America’s national security is clear yet the managers of our retirees’ pensions and university endowments continue to feign ignorance and rue accountability, undermining America’s national interests.”
“That must end now,” he added.
“Not every fund is a villain, and this report highlights the pensions, endowments, and non-profit funds that are leading on this issue. Others should follow their lead and take meaningful action,” he added.
Critics warn that the investments could inadvertently support China’s technological advancement and military buildup, potentially posing long-term threats to US interests. Andrew King, Executive Director of Future Union, declared, “The threat posed by China is clear, yet pension fund managers remain willfully ignorant, jeopardizing our national security.”
However, pension fund managers defend their actions, citing diversification and the potential for high returns. They argue that Chinese companies offer exposure to a rapidly growing economy and that excluding them would hurt portfolio performance and, ultimately, harm the retirement security of millions of Americans.
Adding to the complexity, the Biden administration has implemented policies aimed at restricting investments in Chinese tech firms deemed a national security risk. This creates a tangled web for pension funds, balancing fiduciary responsibility with geopolitical considerations.
The situation highlights the intricate interplay between finance, politics, and national security. It remains to be seen how this delicate dance will unfold, with billions of dollars and the future of US pensioners hanging in the balance.