Florida Gov. Ron DeSantis and some of his administration’s top officials moved Monday to take control of the state’s huge pension portfolio from private asset managers that invest heavily in Communist China.
At a meeting of the State Board of Administration, Florida Chief Financial Officer Jimmy Patronis and Attorney General Ashley Moody joined Mr. DeSantis, a Republican, in a motion to “revoke all proxy voting authority that has been given to outside fund managers.”
The state officials said they need to ensure that fund managers “act solely in the financial interest of the state’s funds.”
The measure also orders a survey of the Florida Retirement System’s investments “to determine how many assets the state has in Chinese companies.”
The state took action after Consumers’ Research, a conservative watchdog group, launched a campaign accusing BlackRock, the world’s largest investment company by assets under management, of close and growing ties with Beijing.
The bond between BlackRock CEO Larry Fink and China’s communist leaders also has drawn criticism from left-wing billionaire George Soros.
In addition to investing clients’ money in Chinese companies, BlackRock was awarded a contract to sell mutual funds in China. The venture has raked in some $1 billion, according to published reports.
“I would like the SBA to survey the investments that are currently being done,” Mr. DeSantis said in a statement. “When the Legislature comes back, they can make statutory changes to say that the Communist Party of China is not a vehicle that we want to be entangled with. I think that that would be something that would be very, very prudent.”
Figures for BlackRock’s investments in China are difficult to pinpoint, but they represent a small portion of the more than $9.6 trillion in assets that the firm manages.
BlackRock’s China A Opportunities Fund, which has returned more than 32% since its 2018 inception, has more than $47.4 million, according to its most recent report.
“BlackRock has been using their proxy votes to hamper American companies, leading to higher burdens on Americans when we can least afford it,” Consumers’ Research Executive Director Will Hild said. “They have used American investment dollars to cozy up to the Chinese Communist Party in a betrayal of our nation that puts American pension dollars at risk.”
BlackRock declined a request for comment.
Although Mr. Fink is an ardent supporter of green initiatives and BlackRock has tried to force American companies to follow an environmental agenda, China is the world’s biggest producer of greenhouse gases.
China also has been accused of numerous human rights violations, including forcing Muslim-minority Uyghurs into labor camps, stifling Hong Kong’s traditional democracy, and silencing and coercing tennis star Peng Shuai over rape charges against a high government official.
National security officials have raised concerns about investments in Chinese companies that operate with the permission of the communist leadership and, in some cases, work closely with the military.
Published reports show BlackRock has invested in at least two Chinese companies, iFlytek and Hikvision, that have been added to the U.S. “entity list” as national security and foreign policy threats.
It is not illegal to invest in such companies, although they are forbidden from trading with U.S. corporations.
Florida’s announcement is the latest in a string of state initiatives to signal that companies should focus on business and profits for shareholders rather than a political agenda.
Last month, West Virginia Treasurer Riley Moore led a coalition of 15 states that threatened to pull funds if bankers tried to stifle oil and gas companies to appease environmentalists.
Mr. Moore called the warning a “pushback against woke capitalism.”
Some top Florida officials supported Mr. DeSantis’ concern Monday.
“As Americans got our cheap goods, the Chinese government wasn’t playing by the rules when it came to intellectual property or trade,” Mr. Patronis said.
“I take my fiduciary responsibilities seriously, and I think the SBA needs to start asking harder questions when it comes to whether investing any more in China is a good idea. It seems limiting our exposure to China is not only good for our country, but it is the financially prudent thing to do for our state,” he said.
The Securities and Exchange Commission and other federal agencies have cautioned that Chinese investments can be subject to the whims of communist leaders and are outside the influence of U.S. or other regulators.
In September, the SEC warned of risks associated with variable interest entities, which are listed on U.S. stock markets but are essentially shell companies with no control over the Chinese entities.
• James Varney can be reached at firstname.lastname@example.org.
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