GOP China, according to Texas Governor Greg Abbott, is a hostile country. He claimed it was responsible for the pandemic’s devastation.
If so, what is Abbott doing with the money he receives from the state?
Huffines, a Republican candidate running against Abbott in the March 1 primary, makes that claim.
According to an advertisement on social media, Greg Abbott has “placed Texas taxpayer cash into Chinese corporations,” Huffines said.
Abbott is not actively investing in Chinese enterprises with tax dollars, albeit he does indirectly.
Huffines’ claim refers to investments made by public pension systems in Chinese enterprises. Although these networks are partially sponsored by public monies, the governor and his appointees do not have direct control over their investments.
What the outcome of the election for governor looks like
Huffines is a Dallas-based businessman and a former member of the Texas Legislature. Texas Governor Greg Abbott is running for reelection to a third term in office.
Beto O’Rourke, a former member of the House of Representatives, is one of the contenders in the Democratic primary.
Generally speaking, the race has been seen as either probable or solidly Republican by campaign observers.
A San Antonio Express-News report in 2022 is what Huffines’ claim refers to in the Huffines’ ad. According to the story, Texas’ seven public pension funds have invested $9.12 billion in Chinese enterprises.
The story revealed that Abbott is not solely responsible for the company’s investment decisions.
Politicians and pension money managers are separated in general, but the Texas Legislature has mandated that assets be divested from corporations boycotting Israel, Sudan, and Iran, as well as those of other countries known to promote terrorism.
Role restraint for governors
According to John Diamond, director of Rice’s Baker Institute for Public Policy’s Center for Public Finance, “The Texas governor has absolutely no direct impact on the precise investment choices of any of the pension funds.”
Oversight is all that is required.
The appointment of members of the Texas State Pension Review Board, who are in charge of all of the state’s public retirement plans, was made by the governor after consultation with the Senate.
In addition, the governor appoints the vast majority of the members of the state’s pension boards.
There are a number of layers between the governor and those who make investment decisions for the seven systems.
When it comes to the retirement system in Texas, for example, the governor appoints a board that sets investment policy, with the advice and permission of the Senate.
Executive directors and employees administer day-to-day operations, while the system uses private consultants who advise on appointing professional managers, such as JP Morgan, to manage various investment portfolios within the system.
Contributions from government employees and employers like county governments are used to fund the investments. Employees contribute 8%, employers contribute 8.87%, and taxpayers fund the Teacher Retirement System (TRS), for example.
When a Beijing-based manager was hired in March 2021 to split $40 million between two China-focused private equity/venture capital funds, the Pensions and Investments trade newspaper commented on it. The two funds invest in Chinese technology firms in their initial stages and growing stages.
“Gov. Abbott’s involvement in the Texas state and municipal pension funds’ investment decisions seems highly doubtful. This is highly unlikely “Dennis Jansen, Texas A&M University economics professor and director of the Private Enterprise Research Center, agreed.
There is a good chance that if you invest in a passive world index fund, such as Vanguard’s Total International Stock Fund, you are also investing in China.
“The Chinese economy is by no means insignificant on the world scale. It is well-established investment advice to diversify one’s holdings across different businesses and nations “Then, he said.
We reached out to the Huffines and Abbott camps for comment, but neither responded.
In an ad, the ruling Huffines said that “Texas is sending taxpayer cash into Chinese firms under Greg Abbott’s leadership.”
Chinese enterprises have been purchased by Texas public pension funds, which contain funds from the state’s budget.
The phrase “leadership” used by Huffines, on the other hand, implies that Abbott is directly in charge of investment decisions. Abbott has a restricted role, and he isn’t performing that. It is up to the pension systems themselves to make day-to-day investments, not the governor, who picks their board members.
There is some truth in Huffines’ assertion, but it overlooks important details that could have a different effect. This is what we mean by Mostly False.