Additional Coverage:
- Amid tensions with China, some US states are purging Chinese companies from their investments (newsbreak.com)
In Jefferson City, Missouri, State Treasurer Vivek Malek has made headlines by urging the state’s primary retirement system to divest from Chinese companies, a move that positions Missouri as a pioneer in this national trend. As he campaigns for reelection in the upcoming August 6 Republican primary, Malek is highlighting this Chinese divestment strategy against his competitors who are equally critical of financial ties with China.
This issue underscores a broader national shift where many candidates, echoing concerns of national security, have advocated for reducing financial ties with China. States like Indiana and Florida have already enacted policies restricting their public pension funds from investing in select Chinese companies. Despite proposals in other states like Arizona and Illinois, not all legislation has passed, indicating varied opinions on this contentious issue.
China’s significant global economic stance only amplifies the complexities of such decisions. According to a review by the nonprofit Future Union, U.S. public pension and university endowments held about $146 billion in investments in China between 2018 and 2022. The group’s leader, venture capitalist Andrew King, criticized the continuation of these investments, suggesting they bolster China’s competitive edge against U.S. technology and innovation.
There is, however, opposition to these divestment strategies. Economists and investment experts have cautioned that these state-level initiatives might lead to poorer investment returns for retirees, with some arguing that such divestment decisions might be better handled at the federal level.
Recent federal actions include the U.S. Treasury Department’s move to block American investments in Chinese AI systems with potential military applications and President Joe Biden’s decision to prevent a Chinese-backed firm from acquiring land near a military base in Wyoming.
The practice of divesting is not new for states. Historical precedents include divestments from South Africa during apartheid, tobacco companies due to health concerns, and more recently, from Russian assets following its conflict with Ukraine.
As part of this growing focus on Chinese investments, several states have adopted laws to restrict Chinese ownership of American farmland, and some extend these restrictions to properties near key infrastructure.
While some experts argue that such state policies might complicate federal diplomacy efforts, they recognize these moves as part of an increasing confrontation between China and the United States. Meanwhile, Indiana has set a precedent by already reducing its pension system’s investments in Chinese firms, reflecting a tangible shift in state policies towards Beijing.
In related developments, Florida has taken steps to divest from companies owned by China, under legislation signed by Governor Ron DeSantis. Simultaneously, Arizona’s governor vetoed similar legislation, underscoring the ongoing debate and varied approaches across the nation.