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US proposals to crack down on investment in China may be undermined by continued funding from some of the country’s biggest institutional investors, a new analysis shows.
A majority of U.S. public pension plans, as well as certain universities and nonprofits, have funneled money to China and Hong Kong, including sensitive technology, most recently this year, according to a report from the nonpartisan Future Union. It is said that some of them are from after entering the company. trade organization.
The 74 largest investors have allocated more than $70 billion to Chinese and Hong Kong companies through more than 1,100 investments in various funds, including exposure to tech giants such as TikTok maker ByteDance. tensenand alibaba.
The data was compiled from a combination of public and private databases, including capital markets databases Pitchbook, Capital IQ, and Private Equity International, and was compiled from a combination of public and private databases, including capital markets databases Pitchbook, Capital IQ, and Private Equity International. The focus is on the fund. However, the report’s authors said the amount invested is likely to be even higher.
These 74 companies are the best examples of a long list of U.S. pension funds invested in China.
andrew king
Managing Director of Future Union Co., Ltd.
“The 74 companies are the best example of a long list of U.S. pension funds invested in China,” Future Union executive director Andrew King told CNBC by phone.
The findings come as U.S.-China relations have deteriorated in recent years amid concerns over national security, trade and defense, including China’s growing military capabilities. provocation Toward Taiwan.
The first face-to-face meeting between President Joe Biden and Chinese President Xi Jinping in November signaled an outward strengthening of ties, but the US government remains steadfast in its plans to “de-risk” from Beijing. There is. In August, Biden imposed a ban on certain investments in China, particularly sensitive technology, which is expected to go into effect next year.
Although not in violation of the ban, King said the fund’s continued investments in “adversaries” highlight “historic misappropriation of capital” by a major capital allocator, adding that the report He added that the purpose of the book was to move the fund and move the money around. change. “
Of the top 74 pension funds cited in the report, three-quarters have made investments in the past 36 months, which “avoids plausible deniability claims” over rising U.S.-China tensions. ” is the minimum standard set by Future Union. Four in 10 (39%) have invested within the past 12 months.
“Despite geopolitical influences, pension portfolio managers entrusted with responsibly managing the retirement assets of America’s pensioners have achieved an impressive 75% renewal rate,” King said. It’s a number,” he said.
“It’s become the latest greenwashing where everyone says the right thing.” [about divesting from China] But getting them to comply is another story,” he added.
California and New York funds take the lead
New York State Common Retirement Fund (NYSCRF) Terminate the service The report said 1.2 million civil servants were identified as the biggest investors in China and Hong Kong, having invested a total of $8.3 billion in the region, including $3.5 billion (42%) in the past 36 months.
Commenting on the findings, a NYSCRF spokesperson disputed the total investment amount, saying it was close to $6.1 billion, or “less than 3% of more than $250 billion in assets.”
California Public Employees Retirement System (CaIPERS) — explains itself It was ranked second as the nation’s largest public pension fund, serving more than 2 million California state employees. The fund has invested a total of $7.8 billion in China, of which a quarter ($1.8 billion) has been invested in the past three years, including 2023.
A spokesperson for CaIPERS said the company is a “global investor and believes diversification is a key element in generating the returns needed to meet the retirement security of its 2 million members.” I believe that.” The fund added that it was “closely monitoring” discussions in Washington and elsewhere, and said it would comply with “any additional requests that the government may initiate.”
Largest public pension fund investing in China and Hong Kong
| US public pension | Number of investments | Total investment ($mm) | Latest inventory date dedication |
|---|---|---|---|
| New York State Common Retirement Fund (NYSCRF) | 72 | 8,392 | 2022 |
| California Public Employees Retirement System (CalPERS) (CA) | 80 | 7,866 | 2023 |
| California Teachers Retirement System (CalSTRS) (CA) | 58 | 5,559 | 2022 |
| Washington State Investment Board (WASIB) | twenty four | 5,025 | 2022 |
| San Francisco Employees Retirement System (SFERS) (California) | 80 | 3,381 | 2022 |
| Pennsylvania Public School Employees Retirement System (PAPSERS) | 31 | 3,220 | 2021 |
| New York State Teachers Retirement System (NYSTRS) | 30 | 3,142 | 2022 |
| Maryland State Retirement System (MASRPS) | 34 | 3,050 | 2023 |
| Oregon Public Employees Retirement System (ORPERS) | 26 | 2,925 | 2021 |
| Texas Teacher Retirement System (TXRS) | twenty four | 2,775 | 2022 |
| Oregon State Treasury (ORST) | 17 | 2,080 | 2018 |
| Illinois Teacher Retirement System (ILTRS) | 34 | 2,012 | 2022 |
| New Jersey Investment Authority (NJDI) | 20 | 1,812 | 2020 |
| Florida Retirement Pension Plan (FRSPP) (Florida) | 15 | 1,664 | 2022 |
| Texas County and District Retirement System (TXCDRS) | 44 | 1,605 | 2022 |
| Virginia Retirement System (VARS) | 11 | 1,450 | 2022 |
| Texas State Employee Retirement System (TXERS) | 18 | 1,368 | 2022 |
| Minnesota State Investment Board (MNSBI) | 15 | 1,316 | 2022 |
| Michigan State Retirement System (MISMRS) | 32 | 975 | 2021 |
sauce: future union
The California Teachers Retirement System (CaISTRS) and the New York State Teachers Retirement Fund have invested $5.6 billion and $3.1 billion, respectively, in China, and each has invested more than that amount in the past 36 months, according to the report. I was allotting a quarter.
CaISTRS said it had approximately 1% of its portfolio invested in China as of December 2022 and is in full compliance with Biden’s executive order. It added that its exposure to China is “modest” and that it plans to hire a dedicated China manager to “identify and manage” related environmental, social and governance (ESG) risks.
The Washington State Investment Commission also gave more than $5 billion to China, about 20% of which was paid in the past 36 months, according to the report. A WASIB spokesperson confirmed that the total investment figure was approximately accurate as of September 2023, but disputed that its commitments had increased in recent years.
The Minnesota Investment Commission has invested more than $1.3 billion in China since 2008, with a remarkable 70%, or $900 million, invested in the past 36 months, the report found. .
Meanwhile, the Texas Teachers’ Retirement Fund has contributed more than $2.7 billion, or 23%, to the China Fund over the past 36 months, including last year.fund Said He plans to cut his future commitments in half by 2022.
CNBC contacted the other funds cited but they declined to comment.
University endowments are making large investments.
The report also found that numerous U.S. universities, both public and private, have made significant investments in China.
University endowments have invested a total of $7.7 billion in China and Hong Kong through 385 investments, many within the past 36 months, according to public data analyzed by Future Union. He added that the true value of the investment could be even higher given the limited disclosure requirements for private higher education institutions.
“The reality is far more unpleasant than portrayed, with private universities largely exempt from disclosing their investments. At the same time, many public universities in the United States shield such investments from public scrutiny and disclosure. Professor King said.
University funds investing in China and Hong Kong
| university donations | Number of investments | Total investment ($mm) | Latest inventory date dedication |
|---|---|---|---|
| Texas Permanent School Fund (TX) (Public) | 39 | 1,971 | 2022 |
| University of Texas System Foundation (TX) (Public) | 29 | 1,607 | 2022 |
| University of Michigan Foundation (MI) (Public) | 83 | 1,570 | 2023 |
| Regents University of California (CA) (Public) | twenty two | 1,556 | 2022 |
| Princeton University (New Jersey) (private) | 12 | 155 | 2020 |
| University of Missouri System Fund (MO) (Public) | 9 | 153 | 2022 |
| University of Washington (WA) State (Public) | 11 | 89 | 2022 |
| Stanford Management Company (CA) (Private) | 12 | 80 | 2014 |
| Texas A&M University System Fund (TX) (Public) | 9 | 50 | 2021 |
| Yale University Endowment (CT) (Private) | 6 | 50 | 2015 |
| University of Pittsburgh Foundation | Ten | 43 | 2020 |
| Texas Tech University System Foundation (TX) (Public) | 8 | 42 | 2021 |
| Massachusetts Institute of Technology (MA) (Private) | 6 | twenty two | 2016 |
| Duke University/Duke Management Company (North Carolina) (Private) | 7 | 20 | 2020 |
| Oklahoma State Board of Higher Education (OK) (Public) | Five | 14 | 2022 |
| Carnegie Mellon University Endowment (PA) (Private) | 7 | Ten | 2020 |
| University of Oklahoma Foundation (OK) (Public) | Ten | Not applicable | 2011 |
| University of Chicago Foundation (Illinois) (Private) | 7 | Not applicable | 2015 |
| Harvard Management Company (MA) (private) | 7 | Not applicable | 2011 |
| MITIMCo/Basic Retirement Allowance Plan (MA) (Private) | 7 | Not applicable | Not applicable |
| Columbia University Foundation (New York) (private) | Five | Not applicable | 2015 |
sauce: future union
The University of Michigan, the state’s largest public university, is the most heavily invested in China and Hong Kong, with $1.6 billion in funding, including in just a few months.
The University of Texas System similarly invested $1.6 billion, about a quarter of which was allocated in the past three years.
This comes as the university is under new scrutiny over its handling of political issues, including its failure to condemn rising student numbers. anti-semitic The incident occurred immediately after the Israel-Hamas war.
Elsewhere, the report found that a series of prominent U.S. foundations and nonprofits were involved in investments in China, with a total of 620 commitments. These include the MacArthur Foundation, the Rockefeller Foundation, and the Carnegie Foundation, including in the past few months.
A MacArthur Foundation spokesperson said: [its] investment and program goals,” but added that China and Hong Kong do not constitute a “significant portion” of overall investments.
Other foundations and universities cited did not respond to CNBC’s requests for comment on the report.
