White House warns railroad pension agency over China investments

The White House has warned the Railroad Retirement Board, a federal agency, that its investments in Chinese assets are an “unnecessary economic risk” that pose a national security threat to America.

Robert O’Brien, national security adviser, said in a letter that “such investment . . . channels American worker funds into [People’s Republic of China] companies that raise significant national security and humanitarian concerns”.

He added that the agency was “permitting hundreds of millions of dollars” in retirement funds managed by the National Railroad Retirement Investment Trust to be invested in Chinese companies, including some under US sanctions, in the letter penned with Larry Kudlow, the White House economic adviser.

The move marks the latest effort by the Trump administration to put economic pressure on China as relations between the two nations continue to spiral downwards. It is also another step in a campaign to make sure that federal workers’ pensions are not invested in China.

In May, the Federal Retirement Thrift Investment Board (FRTIB), which manages $594bn for 5.9m workers, abandoned a plan that would have increased its investments in China following White House opposition.

The White House has raised many concerns about the investments. In addition to the security issue, it said there were “serious fiduciary issues” because China barred its companies listed on American exchanges from complying with US securities laws.

“Such concerns include the possibility of future sanctions or boycotts that may arise from a wide range of issues, including the culpable actions of the Chinese government with respect to the global spread of the Covid-19 pandemic,” the US officials wrote.

They said the concerns included China’s “suppression of Hong Kong’s democracy”, and “gross human rights violations” in Xinjiang, a province where more than 1m Uighurs are being detained in re-education camps.

The White House said the railroad retirement investments included companies that supply the Chinese military and companies that help Beijing conduct surveillance at the camps in Xinjiang province.

In recent weeks, the US has introduced a number of visa restrictions on Chinese officials involved in setting policy towards Xinjiang, Tibet and a draconian security law recently introduced in Hong Kong.

The White House asked Erhard Chorlé, the chair of the RRB board who was appointed by Mr Trump, to respond to their concerns by July 15.

The FRTIB initially resisted White House pressure, but reversed course after an intervention by President Donald Trump. It was unclear if the RRB would follow suit. The agency did not reply to a request for comment.

Follow Demetri Sevastopulo on Twitter: @dimi