Last Wednesday, the Trump administration announced the halt of investments from China stocks to the Federal Retirement Fund. The move was sais to prevent the channelling of savings from government workers to companies labelled as threats to national security goals.
In a statement, the Federal Retirement Thrift Investment Board announced that investments from China stocks would be deferred. The transition of the Federal Retirement Fund was a response to a 'meaningfully different economic environment' caused by the pandemic. The organization is tasked at managing retirement savings plans in the United States. The Board also announced that it has nominated three board members to oversee the fund.
The Federal Retirement Fund is a part of the Thrift Savings Plan. At present, it holds 593.7 billion USD and has been planning to diversify its international stock option. The assets under management were said to be one of the issues affected by the increasing political tensions between China and the United States.
US President Donald Trump and members of his administration recently adopted a sharper approach against China. The decision was then made following the administration's sentiments. In recent weeks, Trump manifested his doubt over phase one of the China-US trade deal after Chinese purchases of American products fell drastically.
Last Wednesday, Trump tweeted that dealing with China is expensive for the US government. He noted that there are existing issues relating to the China-US trade deal, mainly when the pandemic adversely affected the global economy in recent months.
In other news, Safe Haven reported that Chinese investment in the US has dropped by 90 percent since Trump took office. Chinese investments in the US was only at five billion USD in 2019, that is a slight decrease from 2018. The Chinese direct investment was labelled as the lowest level since 2009.
According to a report by the National Committee on China-US Relations, Chinese direct investments in the United States for 2020 was only 200 million USD. The value was down from two billion incurred per quarter during 2019. The report then claimed that the worsening bilateral relationship between China and the US would further discourage Chinese buyers from engaging in significant acquisitions.
The direct investments referred to mergers, acquisitions, and finances on officers and factories, excluding financial investments such as the purchase of US stocks. It was also noted that Chinese direct investments to the US have been declining since 2018. In 2019, these investments only amounted to 4.8 billion USD that was a significant decline from the 29 billion USD total of investments in 2017 and a 46 billion USD yield during 2016.
