Baton Rouge, LA—On May 13, 2025, Louisiana State Treasurer John Fleming, M.D., sent a letter to the directors of the ten Louisiana state retirement systems urging a reconsideration of investments in Chinese stocks and bonds. Among the state’s retirement systems, a total of $1.012 billion is currently invested in Chinese stocks and bonds.
Dr. Fleming cited President Trump’s declaration on February 21, 2025, of the “American First Investment Policy.” The order asserts that the People’s Republic of China (PRC) is a foreign adversary that exploits American capital to advance its national military-civil fusion strategy. Their plan utilizes civilian Chinese companies and research institutions to acquire or steal the world’s cutting-edge technologies to achieve military dominance. President Trump’s order directs a review of Chinese private equity, venture capital, greenfield investments, and corporate expansion investments made by United States investors, including pension funds, to determine if restrictions are required in the interest of national security.
In his letter, State Treasurer Fleming expressed “grave concerns” about investments in the PRC and “the Hong Kong Special Administrative Region, or the Macau Special Administrative Region.” He cited nine reasons these investments are “a significant risk for the state’s pension funds.”
Here are the risk factors cited by Treasurer Fleming:
1. Lack of transparency for investors
· Do not follow financial accounting standards.
· Do not adhere to reporting requirements and fraud prohibitions required of US companies.
· Restrict access to certain information by non-domestic authorities.
· Do not obey the rules of free markets.
2. Subject to market manipulation from the Chinese Communist Party, which force limits on stock sales or requires state-owned entities to purchase stocks
3. Market illiquidity
4. Exchange rate fluctuations
5. High level of volatility and limited regulation
6. Decline in China’s economy and rising geopolitical tensions
7. Engages in human rights abuses
8. Social and political instability
9. Engages in state-sponsored theft of intellectual property
State Treasurer Fleming noted that these investments were “likely made years ago, but due to the threat posed by Communist China and President Trump’s Executive Order, I recommend that our state retirement systems carefully and methodically remove their existing Chinese market holdings and to discontinue any new investments.”
In addition, Dr. Fleming advised the state retirement systems to “avoid investments in any other communist country for the same reasons and to consider investing in equities based in the United States.”