By Rep. Raja Krishnamoorthi (D-Ill.), opinion contributor
February 8, 2024
In this photo released by Xinhua News Agency, a J-15 Chinese fighter jet takes off from the Shandong aircraft carrier during the combat readiness patrol and military exercises around the Taiwan Island by the Eastern Theater Command of the Chinese People’s Liberation Army (PLA) on Sunday, April 9, 2023. China’s military declared Monday it is “ready to fight” after completing three days of large-scale combat exercises around Taiwan that simulated sealing off the island in response to the Taiwanese president’s trip to the U.S. last week. (An Ni/Xinhua via AP)
Most Americans, particularly U.S. servicemen and women, don’t want to invest in modernizing Communist China’s armed forces. Yet, that’s where millions of their investment and retirement dollars are headed —unless Congress is willing to step in and stop it.
The degree to which American capital has contributed to the development of the People’s Liberation Army (PLA) is one of the most eye-opening findings of the House Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party (CCP), which was formed last year on a bipartisan basis. In one particularly egregious example, the Committee discovered that the federal government’s Thrift Savings Plan (TSP), which is the world’s largest 401(k)-style retirement plan, allows U.S. government employees, including American service members, to invest in numerous watch-listed or sanctioned People’s Republic of China (PRC) companies or their subsidiaries. Newsweek reported last summer that more than 115 mutual funds available through the TSP contained at least one of more than 30 such companies.
These companies include subsidiaries of AVIC, which builds the PLA’s fifth-generation fighter jet, the J-20, which would be a critical tool for the PRC in any possible invasion of Taiwan. The TSP also offered index funds which invest in subsidiaries of Aero Engine Corporation of China — the company that makes the J-20’s jet engines.
Both AVIC and AECC are under U.S. sanctions.
Multiple mutual funds available through TSP also invest in Huafu Fashion, which the U.S. government sanctions for using forced labor from the CCP’s ongoing genocide against the Uyghurs and other minorities in Xinjiang.
At a September field hearing on the risks posed by the CCP to American investors and markets, members of the Select Committee on China called for an end to these TSP practices to ensure American federal employees, including members of Congress, are not inadvertently financing CCP-controlled companies, including those that manufacture weapons that could one day be used against our allies and our own troops. Just two months later the Federal Retirement Thrift Investment Board (FRTIB), which oversees the TSP, announced that no companies in the PRC and Hong Kong would be included in the TSP’s International Fund benchmark, a positive step that will ensure the largest pot of federal government employee savings will not be passively invested in problematic Chinese companies.
While it is a significant that American service members, Congress, and federal employees will no longer have their savings fund the PRC military and CCP human rights violations through the International Fund, much more work remains to steward the investments of Americans away from the economic and security risks posed by investing in the PRC and in companies the CCP controls.
In addition to the lack of transparency, CCP actions have also put those doing business within the PRC at direct risk through arbitrary detentions and exit bans used to target individuals. Just last fall, a senior executive from the American advisory firm Kroll was banned from leaving the PRC. These actions have led the U.S. State Department to issue a travel advisory urging Americans to reconsider travel to the PRC.
Such action underscores a key issue: If American business leaders cannot travel to the PRC without fear of detention or being prohibited from returning to the U.S., then how can they confidently send American investments there?
It is time for Congress to act and ensure U.S. capital and know-how stops fueling the technological advancement of the People’s Liberation Army and the CCP’s human rights violations. The Biden administration’s recent executive order restricting active investment into the AI, semiconductor, and quantum computing sectors is a very good start, and now it falls to Congress to ensure we capture additional high-risk sectors and ensure problematic passive investments are also prohibited.
The stakes for our country are simply too high for us to ignore these risks and settle on a path of inaction. In a moment where Congress needs to show that it can lead, it’s time we take what we have learned from our conversations with the American people to help focus our priorities and actions. There is more that must be done to build on what has been achieved and protect American investments from the CCP’s increasingly rigged economy and its growing economic aggression.
Raja Krishnamoorthi, a Democrat from Illinois, is ranking member of the House Select Committee on the Strategic Competition Between the U.S. and the Chinese Communist Party.