Some US states are purging Chinese companies from their investments

JEFFERSON CITY, Missouri — Many U.S. candidates running for office this year are asking their states to divest from Chinese companies, calling it the single greatest threat to the country.

Missouri Treasurer Vivek Malek urged the state’s main pension system to divest from Chinese companies, making Missouri one of the first nationally to do so. Now Malek is touting Chinese divestment as he seeks re-election in an Aug. 6 Republican primary against challengers who decry financial ties to China.

China has been portrayed as a major threat to the U.S. by many candidates running for office this year. In addition to Missouri, Indiana and Florida have also restricted their public pension funds from investing in certain Chinese companies. Similar legislation was vetoed in Arizona and proposed in Illinois and Oklahoma.

China is the world’s second largest economy after the US

An analysis by Future Union, a pro-democracy nonprofit led by venture capitalist Andrew King, found that U.S. public pension and college funds invested about $146 billion in China between 2018 and 2022. It said more than four-fifths of U.S. states have at least one public pension fund investing in China and Hong Kong.

The U.S. Treasury Department recently proposed a rule that would ban American investors from financing artificial intelligence systems in China that could have military uses, such as targeting weapons. President Joe Biden in May banned a Chinese-backed cryptocurrency mining company from owning land near a nuclear missile base in Wyoming, calling it a “national security risk.”

Recently, some states announced a divestment from Russia because of the war against Ukraine. However, that was difficult for some managers of public pension funds.

The quest to stop investment in Chinese companies comes as a growing number of states are also targeting Chinese ownership of U.S. land. Two dozen states now have laws restricting foreign ownership of farmland, according to the National Agricultural Law Center at the University of Arkansas. Some laws apply more broadly, such as one facing a legal challenge in Florida that bars Chinese citizens from buying property within 10 miles of military installations and critical infrastructure.

A law signed earlier this year by Florida Gov. Ron DeSantis requires a state board that oversees the pension system to develop a plan by Sept. 1 to divest from Chinese-owned companies. The oversight board had announced in March 2022 that it would stop making new Chinese investments. As of May, about $277 million was still invested in Chinese entities, including banks, energy companies and alcohol companies.

Florida law already prohibits investments in certain companies with ties to Cuba, Iran, Sudan and Venezuela, or involved in an economic boycott of Israel.

In April, Arizona Gov. Katie Hobbs vetoed a bill that would have required divestment from companies in countries designated by the federal government as foreign adversaries. That list includes China, Cuba, Iran, North Korea, Russia and Venezuela.