MIAMI.- Florida financial authorities are evaluating about 500 companies for possible inclusion on the list to withdraw investments in China, reported Chris Spencer, the next director of the state’s investment agency.
Spencer, who has been Gov. Ron DeSantis’ budget chief, will take over as executive director of the State Board of Administration, which oversees investments in the pension system and other state funds, following the signing of the fiscal year 2024 budget. 2025, which begins July 1.
China-related legislation (HB 7071), passed unanimously this year and signed by DeSantis on May 15, requires the State Board of Administration to develop a plan by September 1 to sell stakes in companies majority owned by the Chinese government, the Chinese Communist Party or the Chinese Army.
“We are going to ensure that foreign adversaries like China do not have a foothold in our state,” said the Florida governor after enacting the new legislative measure.
According to the legislation, the withdrawal of investments must be completed within one year. This measure is part of a broader strategy to reduce “state exposure” to entities controlled by the Chinese government.
Investments in Chinese companies
When the law was drafted, it was estimated that the ratio of state investments to such companies was lower than later calculations.
However, a House analysis in February revealed that the state had investments in more than 200 Chinese state entities, valued at $277 million, representing 0.16% of the retirement system.
Among these investments, $53.6 million were linked to China Construction Bank Corp. and $46.4 million to Kweichow Moutai, a company specializing in a Chinese liquor. Meanwhile, most investments were less than $5 million each.
According to state figures, similar bans have been imposed on Cuba since 1993, and on Sudan and Iran since 2007. In 2018, restrictions were implemented on Venezuela.
In December 2021, DeSantis, along with Attorney General Ashley Moody and Chief Financial Officer Jimmy Patronis, ordered a review of the Florida Retirement System’s investments to identify ties to the Chinese Communist Party, and in March 2022, the state paused new investments in China.
Iranian companies
Spencer also highlighted that the implementation of these measures has been smooth and that some 13 companies are on a “continuing review” list due to their ties to Iran, which could lead them to a list of “scrutinized” companies.
However, the main focus is on the 500 Chinese companies under review, in an effort to comply with the new legislation and protect the state’s financial interests.
“As we continue to move forward and obtain more annual financial information on the investment activities of various companies that may be in that area, we will continue to update that list,” Spencer warned.
