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Time for the U.S. to divest from China including private pensions

By Rick Manning

Date:

President Trump, the national security advisor, director of the National Economic Council, and the Department of Labor secretary have all made it clear that investments in non-transparent, Chinese state-owned company securities are too risky and dangerous for federal-employee retirement investing. 

The president’s statement [on July 14] effectively ending the Obama-Biden China exemption to investment transparency rules on U.S. exchanges is an important step to protecting American investors from Chinese vapor companies. Now, the administration and state governments need to take a series of simple but important steps to protect retirement investors and pensions from foreign investments that do not conform to basic auditing standards.

First, the Labor Department should immediately begin by imposing these transparency rules on private pensions and investments. Second, the Labor Department should also divest all funds in non-transparent investments under the Pension Benefit Guaranty Corporation. Third, federal-employee defined-benefit plans should be directed to divest from non-transparent assets as well. Fourth, state governors and financial officers should take immediate action to divest state-employee pension funds from these same unsuitable assets.

If individual investors wish to put their money into Chinese state-owned companies on the Shanghai Composite Index, that is a choice with all the risks that choice entails. However, retirement funds are held to a higher standard under the law and given the administration’s recognition that Chinese assets do not conform to that standard, it would be irresponsible for state officials to not follow suit to protect their employees’ future financial security, too.

Let me be clear, this is not only a fiduciarily sound approach but a morally necessary one as well [because] investing in Chinese companies that engage in child and slave labor effectively makes our nation’s pensioners involuntary slave owners. This is repugnant and it must end. 

Rick Manning is president of Americans for Limited Government (ALG). The organization says it is a “non-partisan, nationwide network committed to advancing free-market reforms, private property rights, and core American liberties.” This op-ed is drawn from a news release the ALG issued on July 15.

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