WASHINGTON, DC - Federal workers might be shocked to know that they could soon fund Chinese companies aiming to harm the US. Unless something changes, it will happen starting next year through federal retirement plans. The somewhat quiet decision will affect hundreds of thousands of federal workers including our military.
"The single most important thing we can do about the emerging and burgeoning China threat, is to stop underwriting it," said Frank Gaffney who leads the Committee on the Present Danger: China.
He charges Wall Street is behind this underwriting effort because Morgan Stanley includes certain Chinese companies in its retirement portfolio.
Gaffney says trillions pour into companies that not only promote human rights violations but also literally fight against us, like Aviation Industry Corporation of China.
"Building actual weapons systems designed to kill American servicemen and women and for that matter the rest of us," Gaffney says.
He is speaking out now because the US government sits ready to follow private industry.
The board overseeing the Federal Retirement Thrift Savings plan has decided to include these same companies in its portfolio. This would affect service members, Congress, and the president's cabinet. Rep. Jim Banks is behind legislation that would prevent those federal funds from being invested in Chinese companies.
"Really we're talking about millions of dollars that are invested on behalf of federal employees," Banks said. "It's almost hypocritical for the federal government to allow for those individuals who have worked for the federal government…to see their money being invested in companies who are very much antithetical to the interest of the United States."
Hank Paulson served as Treasury Secretary for President George W. Bush.
"Decoupling China from US markets by delisting Chinese firms from US exchanges is a terrible idea," Paulson said.
Paulson says the US survived the 2008 financial crisis by coordinating with other key economies like China's. He disagrees with the argument that American investment in Chinese companies threatens national security.
"Even as we build a high fence around a small yard to protect national security, we must not impair our individual and shared economic security and that of the rest of the world," Paulson said.
Gaffney insists that outlook is a mistake.
"On the one hand you've got the financial security which pretty much doesn't care about national security, it's all about the money," Gaffney says. "On the other hand you've got the national security guys who, by and large, with some exceptions, they don't know anything about finance."
And in between, he says, lurks a dangerous place where the Chinese Communist Party has learned to thrive.
"It's simply scandalous," Gaffney said.
Gaffney and others like Congressman Banks hope sounding the alarm will help stop this type of foreign investment into the Thrift Savings Plan, but it's a long shot.