According to the legislative study of the bill released on March 15, the largest investment through the FRS in a Chinese company is the China Construction Bank Corporation, which is estimated to be worth $53. 6 million. Among the banks in China, according to Morningstar. La current entity valued at $36. 3 million is Kweichow Moutan Co. , Ltd. , which is primarily engaged in the production and distribution of alcoholic products.
Overall, the legislative investigation showed that about a dozen of China’s largest companies, as well as 198 holdings, are worth less than $5 million.
Andrew King is a former investment banker and current venture capitalist who runs Future Union, which tracks public pension investments in China. He says it might be less difficult for states that need to divest from other countries to follow the path Missouri is following. A board representing a state workers’ pension fund, which would leave it to a governor or a legislature to make such a decision.
“If a committee does that, a committee that in particular oversees fiduciary tasks and maximizes returns and things like that, it’s a little less pernicious because it’s not about other people in the public eye who have other motivations, also known as politics. Or demagoguery. Or be visible, they simply have an interest in generating the most productive returns,” he says.
Zachary Christensen is a senior policy analyst at the Reason Foundation’s Pension Integrity Project, a libertarian think tank. It argues that directors of public pension systems have a fiduciary duty, requiring them to maximize returns on investments with appropriate degrees of risk.
“Lawmakers deserve and protect this obligation,” he told The Phoenix in an email. “Politicians deserve not to micromanage or dictate the investment decisions of pension systems. Regardless of your political leanings, legislation requiring public pension plans to invest or divest from green power corporations or avoid making investments in certain countries like China is wrong. These measures inevitably impose greater risks and burdens on taxpayers.
by Mitch Perry, Florida Phoenix May 16, 2024
Florida Gov. Ron DeSantis this week signed a law that will lead to the divestment of all Florida pension fund investments in Chinese companies, an extension of policies state lawmakers have implemented for years to show their contempt for the Chinese Communist Party.
The law (HB 7071) requires the State Board of Administration (SBA), the state-owned company guilty of making an investment in the assets of the Florida Retirement System (FRS) retirement plan and administering the FRS investment plan, to extend a plan through Sept. 1 to begin. by promoting all of its direct holdings in Chinese companies. The measure requires the SBA to finalize the sale by Sept. 1, 2025, at the latest.
The FRS’s overall exposure to Chinese state-owned entities is now estimated at around $223. 8 million as of April 30, according to Steve Koncar, the SBA’s director of external affairs.
According to the legislative study of the bill released on March 15, the largest investment through the FRS in a Chinese company is the China Construction Bank Corporation, which is estimated to be worth $53. 6 million. Among the banks in China, according to Morningstar. La current entity valued at $36. 3 million is Kweichow Moutan Co. , Ltd. , which is primarily engaged in the production and distribution of alcoholic products.
Overall, the legislative investigation showed that about a dozen of China’s largest companies, as well as 198 holdings, are worth less than $5 million.
Florida is the latest state to pass a law to abandon investments in Chinese corporations. Last December, the board of trustees that oversees Missouri’s largest workers’ pension fund voted to sell off the maximum of its investments in Chinese corporations, the Missouri Independent reported. And in Indiana, a bill prohibiting Indiana’s public pension formula from making investments in corporations controlled through the People’s Republic of China or the Chinese Communist Party enacted last year.
Andrew King is a former investment banker and current venture capitalist who runs Future Union, which tracks public pension investments in China. He says it might be less difficult for states that need to divest from other countries to follow Missouri’s lead with a board representing a state workers’ pension fund, than to let a governor or legislature make that decision.
“If a committee does that, a committee that in particular oversees fiduciary tasks and maximizes returns and things like that, it’s a little less pernicious because it’s not about other people in the public eye who have other motivations, also known as politics. Or demagoguery. Or be visible, they simply have an interest in generating the most productive returns,” he says.
Zachary Christensen is a senior policy analyst at the Reason Foundation’s Pension Integrity Project, a libertarian think tank. It argues that directors of public pension systems have a fiduciary duty, requiring them to maximize returns on investments with appropriate degrees of risk.
“Lawmakers deserve and protect this obligation,” he told The Phoenix in an email. “Politicians deserve not to micromanage or dictate the investment decisions of pension systems. Regardless of your political leanings, legislation requiring public pension plans to invest or divest from green power corporations or avoid making investments in certain countries like China is wrong. These measures inevitably impose greater risks and burdens on taxpayers.
This is the first time the Florida legislature has directed the SBA to expand a divestment plan to all direct holdings in foreign companies. They have done so starting with Cuba in 1993, Iran and Sudan in 1997 and Venezuela since 2018.
And since 2016, the Florida SBA has been prohibited from making investments in companies that engage in an economic boycott against Israel.
The new law comes after years in which Florida’s most sensible officials indicated they were targeting China for divestment. Expressing considerations about “its documented cover-up of COVID-19” in 2020, Florida’s chief financial officer, Jimmy Patronis, called on all state suppliers to notify the CFO if they were “owned or controlled through the Chinese Communist Party. “
In December 2021, the Florida Cabinet directed the SBA to conduct an investigation of all FRS investments up to the amount of assets the state owns in Chinese companies.
“I would like the SBA to take a look at the investments that are being made lately,” Gov. DeSantis said in late 2021. “When the legislature comes back, it will be able to make statutory adjustments to say that the Chinese Communist Party is not a vehicle that we are looking for. I also think that our country as a whole, even Florida, would like to see more production and relocate production and we would be in a wonderful position to do that.
The law signed through DeSantis on Wednesday passed unanimously in the House and Senate in the 2024 legislative session.
The divestment of Chinese corporations comes a year after the state passed a law prohibiting certain people from China and other “foreign countries of interest” from owning real estate in Florida. The law was unsuccessfully challenged in federal court, but lawyers representing four Chinese nationals living in the state appealed the case and filed a petition with the 11th U. S. Circuit Court of Appeals last month, the Associated Press reported.
Florida Phoenix is a member of States Newsroom, a grant-funded, nonprofit news network and donor coalition as a 501c public charity(3). Florida Phoenix maintains its editorial independence. Please contact Editor Diane Rado if you have any questions: info@floridaphoenix. com. Follow Florida Phoenix on Facebook and Twitter.
Mitch Perry has covered Florida politics and government for more than two decades. Most recently, he was a political reporter for Bay News 9. He also worked for Florida Politics, Creative Loafing and WMNF Radio in Tampa. staff when Florida Phoenix was created in 2018.
Florida Phoenix belongs to States Newsroom, the nation’s largest state-focused nonprofit news organization.
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