Is Abbott investing Texas taxpayer dollars in Chinese corporations?

That is the declare from Don Huffines, one of the Republican gubernatorial candidates challenging Abbott in the state’s March 1 main.

“Less than Greg Abbott’s leadership, Texas is placing taxpayer pounds into Chinese organizations,” Huffines declared in an ad on Fb and Instagram.

Abbott is not instantly investing tax money in Chinese organizations. 

Huffines’ claim alludes to investments in Chinese corporations produced by the state’s public pension techniques. All those devices are funded in part with tax bucks, but their investments are not immediately managed by the governor or his appointees.

How the governor’s race styles up

Huffines is a Dallas businessman and previous Texas state lawmaker. Abbott is trying to find his third 4-calendar year time period as governor. 

The Democratic primary, whose candidates consist of previous U.S. Rep. Beto O’Rourke, is also contested.

In general, the race has been sized up by campaign watchers as likely or strong Republican.

What Huffines’ declare refers to

Huffines’ ad one-way links to a February 2022 story from the San Antonio Express-Information. The tale reported that $9.12 billion is invested in companies in China as a result of Texas’ 7 public pension money.

The tale indicated that the responsibility for expenditure possibilities is not principally Abbott’s. 

It reported that typically, “there is a dividing line in between decisions made by politicians and all those manufactured by the pension revenue professionals,” though the Texas Legislature has requested pension resources to divest from corporations that boycott Israel, from Sudanese and Iranian providers, and from those of other nations considered to sponsor terrorism.

The governor’s limited job

“The Texas governor has definitely no direct affect on the distinct expense selections of any of the pension funds,” reported John Diamond, director of the Center for Public Finance at Rice’s Baker Institute for General public Policy.

The role is minimal to oversight.

With the advice and consent of the condition Senate, the governor appoints the customers of the Texas Condition Pension Review Board, which oversees all Texas community retirement methods. The governor also appoints virtually all board users of the pension programs.

There are, in convert, a quantity of layers in between the governor and the men and women who make the financial investment selections for the seven systems.

For case in point, the Texas County & District Retirement Procedure has a board appointed by the governor, with the tips and consent of the condition Senate, that sets financial commitment coverage. But an government director and staff run the working day-to-working day functions and the program hires non-public consultants who in turn recommend on picking out professional administrators, this kind of as JP Morgan, to regulate several investment portfolios in just the process. 

The investment cash appear from contributions made by authorities employees and the companies, these kinds of as individual county governments. For case in point, the Trainer Retirement Process is funded by 8% worker contributions and 8.87% employer contributions, which are from taxpayer cash. 

In March 2021, the Pensions & Investments trade publication reported that the Texas County & District Retirement Technique committed $40 million to a Beijing-primarily based manager to be split between two China-focused non-public fairness/venture funds cash. The two money concentration on early-phase and development-stage Chinese know-how firms.

“It looks particularly unlikely that Governor Abbott is personally directing any of the investment decision choices of the different Texas condition and area pension cash. Very not likely,” explained economics professor Dennis Jansen, director of the Personal Business Exploration Centre at Texas A&M University.

Any person investing in a passive world index fund, this kind of as Vanguard’s Overall Worldwide Inventory fund, is investing partly in China, or in many global resources, Jansen added. 

“It is not as if China is a little aspect of the world overall economy. Having acceptable diversification throughout industries and nations around the world is perfectly-established investment decision assistance,” he said.

The Huffines and Abbott strategies did not reply to our requests for remark.