US pension funds invest billions in Chinese stocks despite security concerns

Washington: Despite growing tensions between the US and China since 2020, a recent analysis has unveiled substantial ongoing investments by US pension funds in Chinese markets, significantly undermining Washington's efforts to tighten controls on Beijing.

The 'Rubicon Report' by Future Union, a bipartisan non-profit organisation, highlights investments made by public pension funds across 43 US states in China and Hong Kong. It asserts that these funds have directed over $68 billion into China over the past 36 months.

The report specifically identifies major contributors such as the California Public Employees' Retirement System, which has allocated $7.86 billion across 80 investments; the San Francisco Employees' Retirement System with $3.38 billion over 80 investments; the New York State Common Retirement Fund, having invested $8.39 billion in 72 investments; and the California State Teachers' Retirement System, investing $5.56 billion in 58 investments.

"In the past 12 months, there have been 24 investments, signifying support for China's technological advancements," the report noted.

The analysis underscores that various US public pension funds collectively hold more than $73.28 billion in Chinese stocks, prompting concern among experts.

Andrew King, Future Union's executive director, expressed worry over the apparent ignorance and lack of accountability among fund managers concerning China's potential threat to America's national security, reported the New York Post.

King emphasised the need to cease this trend, stating, "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."

The report also flagged investments made by private university funds, albeit without precise figures due to different reporting criteria compared to public institutions. Notably, several leading universities, including Princeton, Stanford, Yale, Massachusetts Institute of Technology, and Carnegie Mellon, have reportedly made significant investments in Chinese stocks.

However, King highlighted that not all investments necessarily support illicit activities, asserting that several institutions might not be aware that their funds are directed into Chinese markets. He urged other funds to follow the example of those leading the way in addressing this issue and urged for decisive action to be taken.

King pointed out that the allure of investing in Chinese stocks persists due to Beijing's stringent market control, which could artificially inflate returns, despite the potential risks associated with such investments.