In a move likely tied to what the Trump administration believes was China's intentional malfeasance in dealing with the coronavirus outbreak, the United States has taken the first steps to divest the country's federal retirement funds from Chinese equities.
Two letters obtained by Fox Business indicate the move, which will likely increase tensions between the U.S. and China, is being done at the direct request of President Trump.
The first letter — sent by National Economic Council Chair Larry Kudlow and national security adviser Robert O'Brien — direct Labor Secretary Eugene Scalia to remove all funds in the Thrift Savings Plan from Chinese equities due to the communist country's "efforts to build its military and oppress religious minorities," as well as its "culpable actions…with respect to the global spread of the COVID-19 pandemic."
"It has come to our attention that billions of dollars from our federal employees' retirement funds in the Thrift Savings Plan (TSP) will soon be invested in Chinese companies. This action would expose the retirement funds to significant and unnecessary economic risk, and it would channel federal employees' money to companies that present significant national security and humanitarian concerns because they operate in violation of U.S. sanction laws and assist the Chinese Government's efforts to build its military and oppress religious minorities," the letter reads. "Further, the Federal Retirement Thrift Investment Board (Board) is set to implement these plans during a time of mounting uncertainty concerning China's relationship with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese Government with respect to the global spread of the COVID-19 pandemic."
The second letter is one from Scalia, expressing similar concerns to the Federal Retirement Thrift Investment Board Chairman Michael Kennedy. Though the direction is coming from the White House, Scalia notes in his letter that:
"…the concerns expressed in this letter have also been voiced by both Republican and Democratic members of Congress, as well as in the extraordinary recent joint statement by the chairs of the [Securities and Exchange Commission] and [Public Company Accounting Oversight Board]."
The letter requests that Kennedy respond to the concerns by Wednesday.