US President Donald Trump is reportedly mulling over possibly blocking a long-planned transfer of around $50 billion in government retirement funds to an international fund that includes Chinese equities. According to reports citing people familiar with the matter, the administration is looking at the possible national security risks involved in investing government money into Chinese listed firms.
In 2017, the Federal Retirement Thrift Investment Board (FRTIB) had approved the decision to transfer part of the Thrift Savings Plan (TSP) to a new fund that mirrors the MSCI All Country World Index. The particular fund encapsulates various emerging markets, including China.
The transfer, which will involve roughly $50 billion out of the government retirement savings fund, was scheduled to take placed during the middle of 2020. With the deadline now looming closer, opponents of the move have now escalated their efforts to halt the transfer.
White House sources have claimed that the president could halt the transfer through an executive order. However, senior officials in the Trump Administration have continued to deny that such a decision has been made by the president at this time.
TSP spokeswoman, Kim Weaver, defended the move in a statement explaining that major companies such as Boeing and Microsoft use the same index and they don't see any issues with them the following suit. She added that the transfer is aimed at ensuring the fund's uniformity to other US 401Ks and the FRTIB and the Office of Foreign Asset Control has all the authority to determine the right investments that should be made.
Republican Senator Marco Rubio, who is opposed to the transfer, applauded the reports of the administration's consideration stating that it was a short-sighted decision made by "unelected bureaucrats" appointed by the previous administration. The official added that he applauds Trump for taking swift action in directing his office to look into the matter.
Rubio, along with other officials opposed to the transfer, has been pushing for new legislation that would reverse the FRTIB's decision. The lead Republican on the House Committee on Foreign Affairs, Michael McCaul, had stated on Twitter this week that federal pension funds should not be going to Chinese companies as it would only end up enriching China at the expense of national security.
Reports of the Trump administration's alleged plan to block the transfer had a slight effect on US stocks. The S&P 500 dropped by 2.1 percent in New York following the news. The offshore yuan was the most hit by the reports, losing its highest one-day value in over a month.
