No China Bashing; Follow Capital Flows ($50 Billion) Channeled Into China Undermining America - FRTIB and ACWI - We've Reached Insanity

Ed.'s note: The Federal Retirement Thrift Investment Board (FRTIB; established as an independent agency) manages the Federal Thrift Saving Plan that are the 401K savings and investment plans for federal employees that serves roughly 6 million current and retired military and federal civilian employees. The FRTIB controls tens of billions of dollars. Michael Kennedy who is the current managing director of the FRTIB and his management team, decided to redirect $50 billion of this savings to a new global investment vehicle known as the All Countries World Index (ACWI). The change to this index hopes to increase its returns on investments in the Asian markets. The problem here is that by redirecting these investments to the ACWI, this would place investments in adversarial companies in China and Russia. The FRTIB board is in the final transition of these funds into the ACWI this month. This decision is insanity.

MSCI ACWI Index

Trump Administration Balks at Letting TSP Members Invest in China

What this means is that these investments of federal employees and retired military personal will be placed in constituent companies of the ACWI that assist in the Chinese governments military activities, espionage, intellectual property theft, human rights abuses as well as many other Chinese companies that do not have basic financial transparency. None of these Chinese companies are in compliance with federal security laws. Chinese companies are being given preferential treatment over American corporate counterparts. This will undermine American interests which the US military retired veterans along with federal employees of the US which they serve. The previous US Navy Secretary Richard V. Spencer stated:

"As Secretary of the Navy, I have a duty to represent the dedicated members of America's naval forces and ensure that, as investors, they are not unwittingly helping to underwrite the threats China and Russia pose to their lives. For the good of the country and those who serve it, the FRTIB must reverse its decision to adopt the All Countries World Index—and do it before a single dollar from its fund pays for a weapons system aimed in our direction."

Navy Secretary, Senators Weigh in On National Security Risks of Passive Investments in Malevolent Chinese Companies

Without going into a lot of background on Senator Tom Cotton from Arkansas related to his allegiances and who backs him financially or what motivates him, the bottom line is Cotton has it 100 percent correct: Bring the technology back to America. The technology that China has either stolen, has been provided with by Israel from America, or has obtained must be brought back to America and secured. This is why the Trump administration does not want China to obtain extremely sensitive ASML microprocessor manufacturing machines built by ASML in the Netherlands. Do not allow China to have access to this critical technology the US military depends on for its systems. These $150 million machines are critical for the advancement of A.I. and very well could break Moore's law. There should not one dollar be invested in the ACWI used to invest in China's high tech infrastructure used to build military weaponry. This is a breach of America's national security and a direct threat to America's industrial capability.

________


Source: CNBC

Federal retirement savings should not fund China's Communist Party

PUBLISHED MON, SEP 30 2019

KEY POINTS

• The Federal Retirement Thrift Investment Board—the body that manages the Thrift Savings Plan (TSP), the 401(k) for federal employees—wants to funnel the retirement savings of federal employees directly to China's communist party.

• Many Chinese companies included in MSCI indexes are state-owned or state-directed enterprises Beijing uses to undermine American workers. They are also involved in China's military, espionage, human rights abuses, and "Made in China 2025" industrial policy. 

• America's investors should never be a source of wealth funding the Chinese Communist Party at the expense of our nation's future prosperity. If the Board refuses to publicly reverse this decision, Congress must act.

China's President Xi Jinping raises his glass and proposes a toast at the end of his speech during the welcome banquet for leaders attending the Belt and Road Forum at the Great Hall of the People in Beijing on April 26, 2019. Nicholas Asfouri | AFP | Getty Images

During the Cold War, it would have been unthinkable for the U.S. government to force members of the military and federal employees to invest their retirement savings in funds that included Soviet companies working against U.S. interests and values.

Yet the Federal Retirement Thrift Investment Board—the body that manages the Thrift Savings Plan (TSP), the 401(k) for federal employees—wants to funnel the retirement savings of these Americans directly to a regime that poses one of the greatest threats to our nation’s long-term security and prosperity: the Chinese Communist Party.

The Board's short-sighted, foolish decision to use the MSCI All Country World ex-U.S. Investable Market Index as a benchmark means TSP retirement accounts will effectively fund companies that engage in human rights abuses and support China's efforts to undermine America. It exposes nearly $50 billion in assets to severe and undisclosed material risks associated with many Chinese companies listed on the index.

Last month, we urged the Board to swiftly and publicly reverse its decision and provide information on how it was reached. The Board's response was not only wholly inadequate, but also informed us that it is outsourcing its review to a Wall Street consultant.

Wall Street has consistently ignored the long-term risks of transferring capital to China in pursuit of short-term gains. Despite the clear risks, the Board and its outsourced advisors failed to consider the national security implications of the decision to transfer TSP funds to Beijing.

Many Chinese companies included in MSCI indexes are state-owned or state-directed enterprises Beijing uses to undermine American workers. They are also involved in China's military, espionage, human rights abuses, and "Made in China 2025" industrial policy.

The Board's short-sighted, foolish decision to use the MSCI All Country World ex-U.S. Investable Market Index as a benchmark means TSP retirement accounts will effectively fund companies that engage in human rights abuses and support China's efforts to undermine America.

One such company is Hikvision, a state-run technology firm that supplies surveillance cameras used in Xinjiang to monitor Uyghurs and other groups brutally oppressed by China. Constituent entities of Hikvision's controlling shareholder, the China Electronics Technology Group Corporation, were added to the U.S. Commerce Department's Entity List last year for “acting contrary to the national security or foreign policy interests of the United States."

Please go to CNBC to read the entire article.
________


Related:

A global index provider is putting more weight on China stocks, raising concerns from lawmakers