American Quislings: Stop Investing in China’s Crimes Against Humanity,

It’s time for pension funds and others to stop supporting companies that abet Beijing’s crackdowns on China’s Uighurs and Hong Kong’s protesters.

By Danielle Pletka and Derek Scissors

Last month, the United States government issued sanctions against eight Chinese companies for complicity in the crackdown on Chinese Muslims in East Turkestan.
As many as a million Uighurs, Kazakhs and other ethnic minorities have been “interned” — wrenched away from families and dumped into harsh concentration camps.
In light of those sanctions, why haven’t the California State Teachers’ Retirement System and other American funds announced that they would stop investing in companies under sanctions?
And why is the federal employee retirement fund poised to move retirement assets to an index fund that includes Chinese companies in 2020?

By any standard, China is led by an amoral dictatorship.
In addition to the continuing horrors in East Turkestan, young people in Hong Kong fighting for freedom fear being brutalized by Chinese security forces. 
In the South China Sea, the People’s Liberation Navy has all but annexed a vast swath of other nations’ territory and international waters.
Chinese companies, answerable to the Communist Party, have built surveillance into drones that Americans buy and telephones that are bought the world over. 
Beijing trolls your children’s apps and Chinese hackers have already breached the private financial and personal information of millions of Americans, not to mention the possibility of forays into America’s most advanced defense plans.
American financial heavyweights and pension funds have in recent years shunned fossil fuels, guns and other investments on ethical grounds.
Yet when it comes to providing capital to Chinese companies — including those directly engaged in surveillance or supporting the People’s Liberation Army — many haven’t resisted investment.
Both state-owned and nominally private Chinese companies enjoy almost unfettered access to American capital markets, including listing on American exchanges and heavy investment from some of the nation’s largest pension funds. 
In mid-2019, China was among the top 10 countries in which the California State Teachers’ Retirement System (CalSTRS) invested. 
According to the most recent data, from June 2019, CalSTRS owned 4.1 million shares of Hangzhou Hikvision Digital Technology Co., which has faced sanctions from the Trump administration for manufacturing surveillance equipment that is being used in the East Turkestan concentration camps. 
The New York State Teachers’ Retirement System and the Florida state pension fund have owned shares of the same company (the New York State Common Fund liquidated its shares in Hikvision in May).
These and other pension funds including New York State’s, and the enormous California Public Employees’ Retirement System (CalPERS) have indirectly owned shares in iFlytek Co Ltd., another of the Chinese firms blacklisted by the U.S. government.
We reached out to the funds, seeking the current status of their investments in Chinese companies, but got little information.
“We have been tracking the situation,” CalSTRS told us, and a representative for the New York State Teachers’ Retirement System said: “Our holdings in public international equities are primarily held according to their weights in passive portfolios benchmarked to the MSCI ACWI ex-U. S. index, our policy benchmark.”
A company representative at CalPERS just pointed us to its Governance & Sustainability Principles. A representative for the Florida state pension fund confirmed that it still owns shares in Hikvision.
There are sound political and financial reasons to question the wisdom of exposure to Chinese public and “private” companies. 
It’s almost impossible to know at what moment the United States may levy sanctions against a company for complicity in the Chinese government’s malign agenda.
Hikvision, Huawei, ZTE (telecommunications conglomerates that also spy for their Beijing bosses), and some others, are good examples.
There is also pure fiscal prudence: Chinese corporate data is notoriously sketchy. 
China’s own National Audit Office has found a number of cases of falsified accounts among listed companies, even among top state-owned enterprises.
In an amusing example from earlier this year, the pharmaceutical manufacturer Kangmei discovered it didn’t have $4.4 billion in cash as its records indicated, with the explanation that it had experienced an “accounting error.”
Lack of accounting and management transparency also plague Chinese stocks listed on the NASDAQ, the New York Stock Exchange and other markets. 
Megacompanies like Alibaba Group, Baidu, PetroChina, China Life Insurance Company and JD.com officially have a combined market capitalization of over half a trillion dollars.
Despite that, Chinese firms have repeatedly failed to comply with American financial regulations, including required inspections of their accounting records — a requirement that runs counter to the goals of China’s National Administration for the Protection of State Secrets.
The Trump administration has considered blocking Chinese access to American capital markets for regulatory noncompliance.
A more straightforward option would be to demand compliance from Chinese firms.
After all, the notion that select foreign firms would be exempt from, say, environmental or labor regulations is absurd. 
Why are financial regulations different?
As far as indexed funds are concerned, a mild response may be in order.
Why tell individual or institutional investors they cannot invest, when simply informing them — cigarette warning style — could suffice: “This fund includes companies that help suppress human rights, support the Chinese Army and may be spying on the United States.” 
Who could argue against the government providing basic facts?
Ultimately, many of these problems fall into the category of known unknowns.
The main challenge is the risk posed to the uninformed: the millions of Americans who depend on their state or employee pension funds, and may have no clue where their hard-earned pennies are being invested. 
For example, the federal employees (including the military) whose 401(k)-like plan — known as the Thrift Savings Plan or TSP — has confirmed it will move its retirement assets to a new index made up of about 8 percent Chinese companies in 2020. 
As a result, federal employees could soon be supporting Chinese rights abusers, the People’s Liberation Army and spies.
Despite those facts, congressional efforts to derail TSP’s investment in Chinese firms have been met with horror.
Legislators can’t tell anyone where to invest — until they do, as the Islamic Republic of Iran and its supporters in corporate and financial America learned some years ago.
Divestment from companies and funds that treat money and morality as separate matters has been gaining speed at both the state and federal level. 
Perhaps it’s time for the same ideals to apply to China — one way to protect American investors, American ideals, and American security all at once.

China's crimes against humanity

American Lawmakers Push to Sanction Chinese Officials Over East Turkestan Camps
“No Chinese official or business complicit in what is happening in East Turkestan should profit from access to the United States or the U.S. financial system.”

Josh Chin and Eva Dou

A screen showed Chinese dictator Xi Jinping in China's East Turkestan colony last year. 

BEIJING—Members of Congress are pressuring the Trump administration to confront Beijing over the mass roundup of Muslims in internment camps, urging travel and financial sanctions be clamped on senior Chinese officials involved in the detentions.
In a letter sent Wednesday to Secretary of State Mike Pompeo and Treasury Secretary Steven Mnuchin, Florida Republican Sen. Marco Rubio and 16 other members of Congress from both parties called for the sanctions on seven Chinese officials and two businesses that make surveillance equipment.
An official at the Treasury Department, which is largely responsible for executing the administration’s sanctions policies, said the office “responds as appropriate to Congressional correspondence” and doesn’t “telegraph sanctions or comment on prospective actions.” 

A State Department spokeswoman said she hadn’t seen the letter.
The letter, which was reviewed by The Wall Street Journal, cites the Communist Party boss of East Turkestan, the western colony where Chinese authorities have over the past year vastly expanded an internment program that initially targeted religious extremists but now includes broad numbers of Uighurs, a largely Muslim ethnic group.
The build-out of detention centers to neutralize Uighur opposition to Communist Party rule has been under way for two years in East Turkestan. 

Only in recent months, as the build-out has gathered momentum, has the program begun to attract concerted criticism from Western governments.

A Chinese Auschwitz–Birkenau in East Turkestan

China’s detention of as many as a million Uighurs and other Muslims in the camps “requires a tough, targeted and global response,” the letter from the Congress members said. 

“No Chinese official or business complicit in what is happening in East Turkestan should profit from access to the United States or the U.S. financial system.”
China’s Ministry of Foreign Affairs didn’t respond to a request for comment. 

Senior Chinese officials have denied the mass incarcerations and said the centers are for "vocational" training.
In calling for sanctions, the letter urges the Trump administration to apply the Global Magnitsky Act. 

The act, named after a Russian lawyer and whistleblower who died in prison in 2009, allows the U.S. to freeze the assets and ban the entry of foreign individuals involved in gross violations of human rights or sizable acts of corruption.
While Congressional letters are sometimes dismissed by the State Department with a form response, this letter lands as officials inside the department are pushing for action on East Turkestan, said Todd Stein, a former State Department staffer who worked on human rights issues in China.
“It would not be surprising to see Magnitsky sanctions come out on East Turkestan,” said Mr. Stein.
The State Department last month said it was “deeply concerned” about the camps and the campaign against Chinese Muslims.
East Turkestan has come to resemble an armed encampment in recent years as the Chinese battle what they see as violent separatism fueled by "terrorists". 

A high-tech surveillance network enables police to track and collect evidence on people seen as potentially threatening.
The detention centers, many of them equipped with watchtowers and surrounded by high walls topped with razor wire, have expanded in recent months, according to satellite imagery and interviews with former inmates and relatives of those detained.
Much of the spread of this security network has taken place under East Turkestan’s party chief, Chen Quanguo. 

He arrived in the region in 2016 after a stint in Tibet, where he is credited by security experts with stifling dissent and ending a series of self-immolations by Buddhist monks protesting government controls.
The letter sent by the Congress members names Chen. 

An attachment to the letter also cites Hu Lianhe, a senior official with the Communist Party’s United Front Work Department, who defended the program before a U.N. panel last month. 

He denied arbitrary detentions were taking place and said the centers are being used as "vocational" training centers for petty criminal offenders.
Neither Chen nor Hu could be reached for comment late Wednesday in China. 

They haven’t responded to previous attempts to reach them to discuss the situation.
The two companies the Congress members want targeted are Hangzhou Hikvision Digital Technology Co. and Zhejiang Dahua Technology Co. Ltd., two of the world’s largest manufacturers of video surveillance equipment. 

Both have significant business in East Turkestan and in the U.S. 

Both were also banned from supplying equipment to the U.S. military in the recently approved John S. McCain National Defense Authorization Act. 

The companies couldn’t be reached for comment.
Experts on East Turkestan disagree about how effective Magnitsky sanctions would be. 

David Brophy, a historian at the University of Sydney, said it isn’t clear if East Turkestan officials have large overseas bank accounts that would make them vulnerable to such sanctions. 

The Magnitsky sanctions were originally designed to target Russian officials with significant overseas wealth, he said.
He also said that Beijing could use the continuing U.S.-China trade war as a way to brush off any unilateral U.S. pressure over East Turkestan.
“It makes it very easy for China to characterize opposition to its policies in East Turkestan as simply part and parcel of efforts to constrain China’s economic development and its political rise,” he said.
China has rebuffed requests by Western governments in recent months for access to the detention centers in East Turkestan. 

In July, a senior European Union foreign affairs official, Paola Pampaloni, raised the request during an annual EU-China human rights dialogue and was promptly turned down, according to two people familiar with the talks.
Germany’s Interior Ministry last week told lawmakers it is halting deportations of Uighurs and members of other Muslim minorities to China for now. 

In April, a Uighur man was mistakenly deported from Germany to China due to what officials called an administrative error, according to German media reports.