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Divestment of Chinese assets in Missouri public pensions gains foothold

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(The Center Square) – A push by Republicans to divest pension investments in China gained a foothold with a vote by the board of the Missouri State Employees’ Retirement System and will continue with legislation.

After a voice vote failed last month on Republican Treasurer Vivek Malek’s motion to divest the pension fund’s holdings in China, Republican Gov. Mike Parson sent a letter to the 11-member board urging them to reconsider and take a roll call vote. On Tuesday, the motion passed 9-2, with Senate Minority Leader John Rizzo, D-Independence, and Gary Findlay, the retired executive director of the organization, voting against.

Rizzo called Malek’s push a political ploy to help him in the Republican primary for the office, according to the St. Louis Post-Dispatch. Malek was appointed treasurer after Republican Scott Fitzpatrick was elected auditor last November. Sen. Andrew Koenig, R-Manchester, and Rep. Cody Smith, R-Carthage, and chairman of the House Budget Committee, are also running for the Republican nomination for treasurer.

Rep. Dirk Deaton, R-Noel, who was appointed to the board earlier this year by Speaker Dean Plocher, R-St. Louis, was one of the nine voting for the divestiture. He filed a bill earlier this month that would require all state or local public retirement systems or plans to no longer hold or make investments in China.

House Bill 241 would restrict any investment and require divestment after Aug. 28, 2024, of any holding domiciled, issued, incorporated or listed in the People’s Republic of China or the Chinese Communist Party. It would require pension funds to annually examine holdings to determine if any violate the requirement and divest at least 50% within three years of the discovery; 75% within four years and 100% within five years.

Future Union, a bipartisan advocacy organization, reported a majority of large public pensions in the U.S. invested in China and Hong Kong.

“More alarming is the recency, as 29 of 74 have made investments in the past 12 months (39%), and 56 of 74 of public pension funds with previous investments have made follow-up investments in the past 36 months: a staggering 75% rate by pension portfolio managers entrusted to manage the vast majority of the wealth of pensioners in the U.S.,” according to Future Union’s website.

The organization reported more than $68 billion in investments by U.S. pension funds during the past 36 months. The organization listed three Missouri public pensions with investments in China or Hong Kong based on public disclosure requirements, public filings or other research:

Missouri Local Government Employees Retirement System: one investment of $60 million in 2021 of its $10 billion in assets under management;Missouri Department of Transportation and Highway Patrol Employees’ Retirement System: 14 investments of $92 million in 2021 of its $3.2 billion in assets;Public School and Education Employment Retirement System of Missouri: six investments of $26 million with the latest in 2018 and $54.1 billion in assets.

“I’m very proud to have led the effort to divest MOSERS from China, and would strongly encourage every other public pension fund in Missouri to do the same,” Malek said in an email to The Center Square. “Simply put, China is a bad investment. China’s debt-laden economy is stalling. Just a few days ago, Moody’s downgraded China’s credit outlook from stable to negative. Corporate borrowers are far over-leveraged and confronting default. Credit is tighter since the Chinese government has squeezed excess lending. There are serious structural issues in China’s economy.”

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