U.S. Congressman Jim Banks on Thursday called upon the Federal Retirement Thrift Investment Board to prevent the Thrift Savings Plan from investing in the Morgan Stanley Capital International—All Country World Index (MSCI ACWI.) He said it would further empower the Chinese communist regime.
Banks said: “Companies included in the index include: ZTE corporation; Hikvision; Aviation Industry Corporation of China—all three of which support the Chinese government in a technological or military capacity. It seems ironic that Federal employees’ funds would be used to support our adversaries.”
Experts say Index providers that include stock shares from “China-A share companies”—have no way to know for sure whether the companies are frauds; are arms of the Chinese military, or support human rights abuses.
But many are known to contribute to the Chinese government’s operations—including ZTE, which supplies China’s police with equipment for its mass surveillance efforts.
One of the biggest retirement funds in the United States, the Thrift Savings Plan is for federal employees and members of the uniformed services.
One expert says that while the U.S. government implements policies to combat its adversaries, investing in MSCI ACWI is a backdoor to supporting them.
Christopher Iacovella, the CEO of the American Securities Association, said: “Their diligence process rest on Wallstreet, pressing them to include more Chinese companies in the indexes because Wallstreet know this is a backdoor way around at SCC’s company-specific disclosure and audit regime.”
Last month, Senators Marco Rubio and Jeanne Shaheen urged the Investment Board to reverse the decision to use the MSCI index as a benchmark for a public pension fund—citing exposure to China.
But what’s the next big issue in U.S.-China economic relations? On this Hon. Roger Robinson, the President of RWR Advisory Group, said, “An evolving new U.S. attitude toward China’s access to and penetration of the U.S. capital market.”
Representative Banks in May proposed legislation H.R. 2903 that would prevent the Thrift Savings Plan from investing in the MSCI ACWI index, which it plans to do next year.