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Rubio Statement on MSCI Removing Chinese Military Companies From Its Indexes

Dec 16, 2020 | Comunicados de Prensa

Washington, D.C. — U.S. Senator Marco Rubio (R-FL) released a statement following MSCI, Inc.’s (MSCI) announcement that it would remove seven Chinese companies connected to the People’s Liberation Army from its indexes. In June 2019, Rubio requested information from MSCI regarding the company’s controversial decision to add Chinese companies in its equity indexes, including whether MSCI examined the potential for funding Chinese companies involved in the Chinese government and Communist Party’s military, espionage, human rights violations, and Made in China 2025 industrial policy when it performed due diligence on the Chinese firms that it includes in its indexes.
“More than a year ago, I highlighted how index providers like MSCI funnel U.S. dollars, including from American mom and pop investors and Wall Street, to hostile Chinese companies that are involved in the Communist Party’s military, espionage, human rights violations, and Made in China 2025 industrial policy,” Rubio said. “I was proud to work with the Trump Administration on their Executive Order to prohibit investment in Chinese military firms, and MSCI’s decision to remove these dangerous companies from their indexes is a result of that good work.
“It is regrettable but unsurprising that nothing short of an Executive Order would move an American firm to eliminate from its indexes securities of companies classified by the U.S. government as ‘Communist Chinese military companies’ and human rights abusers,” Rubio continued. “MSCI’s stated decision not to remove these firms’ subsidiaries and affiliates underscores the need for Congress to take further action and further justifies the decision made by the Federal Retirement Thrift Investment Board to abandon the use of an MSCI All-World Index. If any future Administration were to reverse course, it would be a clear signal that they are putting the interests of the Chinese Communist Party and Wall Street above the interests of American workers and mom and pop investors.
“However, there is much more work to be done to address the clear and ongoing risk posed to U.S. economic and national security from the Chinese Communist Party’s exploitation of U.S. capital markets,” Rubio added. “Congress should move swiftly to pass my American Financial Markets Integrity and Security Act, which will ban malicious Chinese companies, as well as their subsidiaries and affiliates, from operating in U.S. capital markets. Passing this bill will make clear to the Communist Party that they will no longer be able to exploit our financial system.”
Last month, Rubio welcomed an Executive Order by President Trump to prohibit U.S. investments in Chinese firms that are on the U.S. Department of Defense list of Communist Chinese military companies. The move closely resembles legislation that Rubio introduced last month, the American Financial Markets Integrity and Security Act, which would prohibit malign Chinese companies — including the parent, subsidiary, affiliate, or a controlling entity — that are listed on the U.S. Department of Commerce Entity List or the U.S. Department of Defense list of Communist Chinese military companies from accessing U.S. capital markets. A one-pager of the legislation is available here.
Earlier this month, Rubio welcomed news that the House will pass an amended version of Senator John Kennedy’s (R-LA) Holding Foreign Companies Accountable Act (S.945), which included key provisions from Rubio and would increase oversight of Chinese and other foreign companies listed on American exchanges and delist and ban over-the-counter trading for firms that are out of compliance with U.S. regulators for a period of three years. The legislation is currently awaiting signature by the President to become law.
In May 2020, Rubio and Senator Jeanne Shaheen (D-NH) welcomed the announcement by the Federal Retirement Thrift Investment Board (FRTIB) that it would halt its short-sighted decision to invest billions of dollars from the Thrift Savings Plan (TSP) — the retirement assets of federal government employees, including members of the U.S. Armed Forces — in opaque Chinese firms engaged in human rights abuses and a wide range of military-related activities.
Rubio and Shaheen also led a group of lawmakers in introducing the bipartisan, bicameral Taxpayers and Savers Protection (TSP) Act, which would prevent the FRTIB from steering federal retirement savings to China. Specifically, the FRTIB plans to shift the TSP’s International Fund Index to the MSCI All Country World ex-U.S. Investable Market Index that includes Chinese companies under U.S. sanctions and U.S. export bans.