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TALLAHASSEE — Florida pension fund managers are ready to begin the process of disinvesting in Chinese-owned companies, hoping that Gov. Ron DeSantis will sign a bill directing the divestiture.
The bill (HB 7071), which was unanimously approved by the House and Senate last week, requires the Chinese government to develop a plan by September 1 to sell holdings related to companies majority-owned by the Chinese government. This is mandatory for the administrative committee. The Chinese Communist Party or the Chinese military. In that case, the sale must take place within one year.
“For a variety of reasons, the exposure is not as high. But once the bill becomes law, it will probably be signed into law or become law soon,” Lamar Taylor, interim executive director of the State Board of Supervisors, said this week, as the agency’s investment said at an advisory committee meeting.
The State Board of Supervisors oversees the state’s investments, which totaled about $225.4 billion as of mid-February. The Florida Retirement System pension plan accounts for approximately 84% of the assets.
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Taylor said targeting companies in which the Chinese government owns 50.1% or more is a “very verifiable standard.”
“There are a number of (outside) service providers that can help identify those companies and be able to do that through the compliance process,” Taylor said.
Taylor added that its current exposure to these companies is “less than $300 million.”
According to a House analysis released in February, the investments in more than 200 Chinese state-owned enterprises amount to $277 million, or 0.16% of the retirement plan. Of this amount, $53.6 million was related to China Construction Bank and $46.4 million was related to Guizhou Moutai, which specializes in certain Chinese liquors. The majority of investments are less than $5 million each.
Similar bans have been in place in Cuba since 1993, Sudan and Iran since 2007, and Venezuela since 2018.
It remains unclear when Mr. DeSantis will sign the China Investment Act, as Congress has not formally sent it to Mr. DeSantis. But the bill is the latest in a series of efforts by national leaders to sever economic ties with China and other countries.
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In December 2021, Mr. DeSantis, Attorney General Ashley Moody, and Chief Financial Officer Jimmy Patronis were investigated by the Florida Retirement System for finding links to the Chinese Communist Party in their roles as State Board of Trustees trustees. instructed them to review their investments.
In March 2022, Taylor announced a moratorium on new investment in China, which had been part of the country’s “emerging markets strategy” since the mid-1990s.
Other recent state laws include a 2023 measure that would restrict certain people from China and other “foreign countries of concern” from owning real estate in Florida.
Lawmakers were considering a proposal this year to clarify land ownership laws, a move that had the backing of a powerful Florida business group, Associated Industries. But the proposal died in February when DeSantis voiced opposition, saying the measure was “an attempt to undo what we have done to protect Floridians from the threat of China.”
The law faces constitutional challenges, and the 11th Circuit Court of Appeals is scheduled to hear arguments in April.
Meanwhile, at the federal level, the US House of Representatives approved a measure on Wednesday that would ban the use of social media app TikTok unless it is sold by its Chinese parent company.
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