Gov. Noem: Investment review finds limited funds in China

Dec 20, 2022, 11:19 PM | Updated: Dec 21, 2022, 4:22 pm

SIOUX FALLS, S.D. (AP) — South Dakota Gov. Kristi Noem said Wednesday a recent review of the state’s investment portfolio found the state did not hold any direct investments in China but has stakes in emerging markets funds that invest in the Asian economic power.

The Republican governor, who is seen as a potential contender for the 2024 White House, has taken aim at China with recent orders. Earlier this month, she gave the state’s Investment Council a week to review its $19 billion portfolio for ties to China, arguing that all companies in the country are tied to its Communist government. In letters released Wednesday, she called on Congress and The Vanguard Group to assist the state’s efforts to divest from China.

In a series of hawkish steps and statements, Noem has sought to define China as a “nation that hates us,” argued the country poses a threat to American food supplies and claimed in a letter to Congressional leaders that the Chinese government has “infiltrated the homes” of Americans who use TikTok, the popular video-sharing app that is owned by a Chinese company. The governor last month banned the platform from state-owned devices and over a dozen states have followed suit.

Matt Clark, the state’s investment officer, said the state earlier this month sold off about $1.4 million in holdings in the three companies that had headquarters in China. He added that the economy is “global and intertwined” and major companies, such as Apple, often have holdings in China, but the state will not divest from companies like that.

Nome’s office said South Dakota has 1.3% of its portfolio invested in a Vanguard emerging markets exchange-traded fund, which in turn has one-third of its holdings in China. It also has 0.7% of its portfolio in real estate and private equity partnership funds that have Chinese holdings.

Clark said he couldn’t discuss future investment options when asked about those investments.

Noem seems to be looking for a way to cleanse those kinds of investments of Chinese ties. She sent a letter to the CEO of The Vanguard Group requesting that it create an alternative fund without investments in China.

“This would provide states the opportunity to safely invest our state trust fund and pension dollars without exposure to the threat of the CCP,” Noem wrote, referring to the Chinese Community Party.

The governor is also asking the South Dakota Investment Council to come up with alternative investments.

U.S. President Joe Biden last year expanded a list of Chinese companies whose shares are off-limits to American investors because of their purported links to the Chinese military and surveillance. Chinese officials vehemently objected to that move.

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Gov. Noem: Investment review finds limited funds in China