President Donald Trump is cutting investment ties between the United States and Chinese equities, according to a letter from national security adviser Robert O’Brien and National Economic Council Chair Larry Kudlow to U.S. Labor Secretary Eugene Scalia.
“It has come to our attention that billions of dollars from our federal employees’ retirement funds in the Thrift Savings Plan (TSP) will soon be invested in Chinese companies,” reads the letter, which was first obtained by Fox Business. “This action would expose the retirement funds to significant and unnecessary economic risk, and it would channel federal employees’ money to companies that present significant national security and humanitarian concerns because they operate in violation of U.S. sanction laws and assist the Chinese Government’s efforts to build its military and oppress religious minorities.”
The Federal Retirement Thrift Investment Board is “[d]eparting from the Board’s established index for the International Stock Investment Fund (I Fund) to track one that maintains Chinese equities is risky and unjustified,” the letter states.
“In addition to the uncertainties surrounding the financial reporting of these companies, some of the Chinese companies themselves present significant national security and humanitarian concerns for the United States, which increases the risk that they could be subject to sanctions, public protests, trade restrictions, boycotts, and other punitive measures that jeopardize their business and profitability,” the letter reads. “The list of companies that would receive federal retirement funds under the Board’s decision includes, for example, military contractors that provide military aircraft and telecommunications support to the People’s Liberation Army. The list also includes companies that manufacture surveillance equipment that China uses to oppress religious minorities as well as one company indicted for engaging in economic activity with Iran and North Korea in violation of U.S. sanctions law.”
The letter specifies that the way that the Chinese Communist Party (CCP) handled the coronavirus outbreak, which originated in Wuhan, China, was also a major factor in the decision.
“The Chinese Government concealed critical information from the United States and the rest of the world regarding COVID-19 and exacerbated the ensuing global pandemic,” the letter states. “After first reporting its cases of the novel coronavirus in late December 2019, the Chinese Government concealed and delayed releasing critical information about the virus’s origins and characteristics. These events dramatically increase the risk that Chinese companies could be subject to sanctions or boycotts that jeopardize their business and profitability and strongly militate against the Board making a significant investment of federal workers’ retirement funds in Chinese companies at this time.”
Scalia then wrote a letter to Federal Retirement Thrift Investment Board Chairman Michael Kennedy in which he shared the letter from Kudlow and O’Brien.
Scalia’s letter explains that the decision to stop the $4.5 billion in investments from being turned over to the Chinese companies was directed by Trump and that Kennedy was instructed to respond by midweek that he will do as instructed.
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