WORLD
How could that happen?
Federal employees can invest in Chinese companies sanctioned by the U.S. through their government retirement plan.
Millions of federal employees can invest in Chinese companies sanctioned by the U.S. government via its flagship retirement plan—even though these companies have been branded a danger to national security or are accused of profiting from forced labor or other human rights abuses, a Newsweek investigation reveals.
Since June 2022, the federal government’s employee retirement savings plan—the largest in the world with $720 billion in assets—has offered its 6.8 million members the option to invest some of their savings via a platform that gives them access to an additional 5,000 mutual funds beyond the plan’s core funds. Some of the funds available through the portal have holdings in Chinese companies that are on at least nine U.S. government sanctions or watch lists, according to an exclusive analysis for Newsweek by Washington D.C.-based consulting firm Kilo Alpha Strategies, using data from the Coalition for a Prosperous America, a nonprofit that describes itself as a bipartisan coalition of farmers, ranchers, manufacturers and labor organizations that make and grow things in the U.S.
Among those companies are a leading developer of engines for fighter planes and turbines for naval ships, solar panel firms targeted for allegedly using forced labor by Uyghurs and others living in China’s western Xinjiang region, as well as makers of surveillance systems seen as a threat to the U.S.
That such investment opportunities are being made available through the Thrift Savings Plan (TSP) run by the Federal Retirement Thrift Investment Board (FRTIB), a federal agency, raises questions about how effectively the federal government is enforcing its own sanctions against companies deemed national security risks. Although it is unclear how much money participants have invested in the sanctioned companies, the option also highlights a lack of coordination among government agencies over multiple U.S. sanctions lists, as well as broader tensions over investment in China between officials who want to take a tougher line against Beijing and finance firms that see opportunities in the market offered by the world’s biggest manufacturing hub.
“It’s economic malpractice, it’s moral malpractice, it’s geopolitical malpractice,” says former U.S.
Ambassador-at-large Nathan Sales, now a senior fellow on the Atlantic Council, a think tank that focuses on international issues.
“The federal government has no business allowing federal employees’ retirement funds to prop up an authoritarian regime,” says Sales, who focused on China issues as the former acting undersecretary of state from 2017-2021 during the Trump administration.
