U.S. Pension Funds, Universities Dumping China Investments

US pension funds and universities have seen the light and are dumping investments in China owing to the unstable policy environment controlled by Chinese President Xi Jinping and the grim consequences of the National Security Law that has been used against US firms doing due diligence work and risk analysis in Beijing and Shanghai.

Photo Insert: Public education employee pension funds from California to Texas and dozens of other states are also slashing their investment in Chinese equities while proposed pieces of legislation seek to decouple huge pools of public money from the Chinese market.

Reporting for Nikkei Asia, Jack Stone Truitt said US public pension funds and universities are facing extreme pressure from lawmakers and the White House to quit the China market quickly to avoid running afoul of laws that the federal and state governments are crafting.

Public education employee pension funds from California to Texas and dozens of other states are also slashing their investment in Chinese equities while proposed pieces of legislation seek to decouple huge pools of public money from the Chinese market.

Proposed federal and state legislation takes aim at public money being used toward investment into China over fears about national security and fears that American dollars may be used to fund companies working on military projects that undermine strategic interests.

As early as June 5, 2023, Josephine Cumbo of The Financial Times reported that APG, one of the world’s largest asset managers, said its pension fund clients were getting out of China, which they regard as a huge geopolitical risk.

The Netherlands-based group, which manages about €532 billion of assets for Dutch pension plans serving around 4.8 members, is an established investor in China and opened an office in Hong Kong about 15 years ago.

On the other hand, Bloomberg News reported on March 29 that BlackRock and Fidelity are losing out on the China market that could be worth $1.7 trillion, as the Chinese government has skewed the system to favor domestic banks and fund managers.

As always, Chinese clients have been told to invest in local pension funds that were launched only last year.

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