The governor of Texas ordered state agencies to stop investing in China and sell assets there as soon as possible, citing financial and security risks, a sign of rising U.S.-China tensions starting to impact global capital flows.
In a letter to state agencies dated Nov. 21 and posted to his website, Gov. Greg Abbott, a Republican, said “belligerent actions” of China’s ruling Communist Party had increased risks to Texas’ investments in China, and told investors to get out.
“I direct Texas investing entities that you are prohibited from making any new investments of state funds in China. To the extent you have any current investments in China, you are required to divest at the first available opportunity,” he said.
Texas has been taking an increasingly activist stance in its agencies’ investments, having previously restricted public pension funds from doing business with Wall Street firms that have embraced environmental, social and governance principles.
Its state agencies include the Teacher Retirement System of Texas, which had $210.5 billion under management at the end of August, according to its annual report.
The TRS has roughly $1.4 billion exposure to Chinese yuan and Hong Kong dollar assets, and listed Tencent Holdings as its 10th largest position, worth about $385 million at current prices.