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White House pushes Thrift Board to back off China index investment

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White House officials have asked the Department of Labor to immediately stop the federal government’s retirement fund from shifting a key fund to include investments in an index including firms with ties to the Chinese government.

National Economic Council director Larry Kudlow and National Security Advisor Robert O’Brien wrote to Labor Secretary Eugene Scalia on May 11 to ask that he stop the Thrift Savings Plan from switching its international stock index fund to one that included China-based companies that supported the nation’s military and other surveillance measures.

The Federal Retirement Thrift Investment Board oversees the TSP, which manages more than $550 billion in U.S. federal employees and armed service members’ retirement plans.

A FRTIB spokesperson said the board had no comment on the letter at this time.

In November, the FRTIB restated its intention to invest in the MSCI All Country World Ex-US Investable Market Index. The move prompted several members of Congress to introduce legislation designed to block the investment.

Kudlow and O’Brien cited China’s violent suppression of religious minorities and the coronavirus pandemic's origins in the Wuhan province as concerns.

They alleged that allowing the switch to go through would needlessly expose federal workers' funds to national security and economic risks and noted that the Securities and Exchange Board and Public Company Accounting Oversight Board have had difficulties in auditing companies based in China and Hong Kong.

"Recent events, which the Board could not have anticipated when it affirmed its decision in November 2019 to move forward with adding Chinese-listed equities to the I Fund, have heightened these risks," they wrote. "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."

Kudlow and O’Brien asked that Scalia make a decision by May 15.

About the Author

Lia Russell is a former staff writer and associate editor at FCW.

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