President Trump is moving to prevent a major federal pension fund from investing American cash in Chinese companies accused of human rights abuses.
The actions come amid growing anger over China’s handling of the coronavirus pandemic and as the White House monitors the country’s progress in meeting the terms of January’s trade deal.
On Monday, the White House named three nominees for the Federal Retirement Thrift Investment Board, which oversees a retirement savings fund for everyone from administration officials and members of Congress to military personnel.
It has been under intense pressure to reverse a decision to allow the Thrift Savings Plan’s $50 billion international fund to track an index that includes China-based stocks.
On Thursday, an official confirmed the motive behind the nominations.
“Obviously, the president doesn’t want this investment to take place and is looking for other alternatives,” said a senior administration official. “These individuals will be key to making that happen.”
The index includes Hangzhou Hikvision Digital Technology, a surveillance company blacklisted by the U.S. Department of Commerce, which said it was “implicated in human rights violations and abuses against the Muslim Uighur minority.”
If confirmed by the Senate, the three — John Barger, Christopher Burnham, and Frank Dunlevy — would leave Obama appointees in the minority, paving the way to undo their 2017 decision. Money was expected later this year to start moving into the MSCI All Country World ex-U.S. Investable Market Index, which invests in emerging markets, including China.
Officials have discussed a range of options for ramping up economic pressure on China, from fresh tariffs to demanding damages from Beijing, but a former official familiar with discussions said the most effective option would be to choke off American investment, such as the pension fund.
“The president is absolutely ready to do it,” he said.
Anti-Beijing rhetoric has intensified in Washington, which has accused China of covering up the early extent of its coronavirus outbreak and failing to warn the world properly. Officials have been trying to build an anti-Beijing coalition, albeit with mixed results.
Other measures in the pipeline include the draft of an executive order moving medical supply chains back to the United States.
The flashpoint could come next week, when the president says he will offer an update on whether China is fulfilling the requirements of the trade deal.
The first phase, signed in January as the novel coronavirus began its spread, committed China to buy an extra $200 billion of American goods in 2020 and 2021. Since then, the COVID-19 pandemic has devastated the Chinese economy, which is only now starting to recover.
An analysis by S&P Global Market Intelligence, Panjiva, shows that China is already $21.2 billion behind schedule in 2020 so far — not even halfway to its target on a monthly basis.
When asked about imposing sanctions on China, Trump said he would address the question at the end of next week.
“They understand they have a deal, and, hopefully, they’re going to get with the deal, and we’ll see,” he told reporters in the Oval Office on Wednesday. “They may. They may not. We’re going to find out.”
Whatever happens next, the cooling of U.S.-China relations comes soon after progress in terms of the trade deal, which drew a curtain on two years of tariff wars.
In an editorial published last week, the state-controlled China Daily said: “The rapport that seemed to have developed between the two countries during their trade talks is now just a distant memory.”
And this week, White House press secretary Kayleigh McEnany highlighted administration accusations that China was slow to share information about the novel coronavirus.
“Right now, it’s a relationship of disappointment and frustration because the president has said how frustrated he is that some of the decisions of China put American lives at risk,” she said.
