CalPERS Faces Backlash Over $282M in Controversial China Investments
CalPERS, California's main state pension fund, has invested a significant amount in HongShan, a Chinese venture capital firm with ties to the Chinese Communist Party. However, these investments have raised concerns due to the firm's links to blacklisted companies and allegations of human rights abuses. Meanwhile, China's aging population and economic challenges pose long-term risks for investors.
CalPERS has invested a total of $282 million in HongShan since 2022. However, these investments have not been without controversy. The U.S. House Select Committee investigated HongShan for its links to the Chinese military and alleged human rights abuses. Additionally, some of the companies HongShan has invested in, such as Bytedance (TikTok), Yitu (facial recognition), and Qihoo 360 (cybersecurity), have been blacklisted by the U.S. government.
CalPERS' investments in HongShan have resulted in an estimated loss of $7.7 million as of March 31, 2025. The pension fund also paid $3.3 million in management fees to HongShan for the fiscal year ending on June 30, 2024. These losses and fees highlight the risks associated with investing in China, which include political instability and economic challenges.
President Biden's 2023 executive order has started to limit outbound American investment in 'countries of concern' regarding 'national security technologies'. This order may further impact CalPERS' investments in HongShan and other Chinese firms.
CalPERS' investments in HongShan have raised concerns due to the firm's links to blacklisted companies and allegations of human rights abuses. Meanwhile, China's aging population and economic challenges pose long-term risks for investors. Despite these risks, CalPERS stated it actively monitors investment regulations and chooses responsible investment managers. The future of these investments remains uncertain, especially with President Biden's executive order limiting outbound American investment in certain sectors.
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